
Ask HN: How would you value this SaaS Company? - findingnimo
 Valuation of a SaaS company
For the sake of this exercise, let&#x27;s assume Company X has $300k ARR, growth now and going forward is 200% year over year.  All customers pay annually upfront.
Net churn going forward falls in the range 10% to -50% depending on how well we do our own CS job.  Assume that each year, we get as much revenue from new business as we get from existing customers (renewals, churn, upgrades etc).
1) What would you say is the value of X is today?
Different types of investors would likely end up with different valuations - discuss the different potential approaches.
2) What ARR would we have in 3 years (in the best&#x2F;worst case net churn scenarios mentioned above)
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ryansmccoy
A few thoughts:

1) You could use Relative and/or Absolute valuation. IMO, the easier would be
relative since it's difficult to pin down a future growth rate. For relative,
find some companies which you might be able to compare against, similar
business model/size, growth trajectory, and that has raised $$.

2) There is no guaranteed method to predict the future and it depends on what
you need the estimate for and, again, would try to find a comparative company
to use as a guide for growth rate.

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findingnimo
Ok thanks I will do that. But doesn’t a figure of 50% annual churn seem much
too high? To calculate the new ARR would I subtract this percentage from the
ARR?

It would be such an immense help if you have some figures I could compare my
answers to!

