Correction — September 30, 2026
Earlier versions of this article said the public SaaS median was about 8.5x NTM revenue in mid-2026 and showed growth-rate ranges and company examples attributed to BVP and Jamin Ball that neither source reports. Clouded Judgement's median was 3.4x on Jun 5, 2026, and 16.3x for companies expected to grow more than 22%. Public figures now cite its dated readings, and the private-to-public comparison is made within the same growth bucket. Private stage multiples and the 30–50% discount are now labelled as the Value Add VC framework, not market data.
In the Value Add VC framework (not market data), private SaaS companies trade at a 30–50% discount to public peers — and understanding exactly why, and when that discount disappears, is one of the most practical things a founder can know going into a raise.
The short answer: as of Jun 5, 2026, Clouded Judgement's median EV/NTM revenue multiple for public cloud software was 3.4x overall and 16.3x for companies expected to grow more than 22%. In the Value Add VC framework (not market data), private Series B rounds clear at 8–15x ARR for high-growth companies, a discount to that high-growth public median, and Series A at 5–12x ARR. That gap is real, predictable, and driven by specific factors you can actually influence.
Where Public SaaS Multiples Stand in Mid-2026
Public SaaS never went back to its 2021 range. Clouded Judgement's median EV/NTM revenue multiple was 20.0x on Feb 19, 2021 and 4.9x on Nov 18, 2022; on Jun 5, 2026 it was 3.4x, below that 2022 reading. By projected growth, on Jun 5, 2026:
| Growth bucket (projected NTM growth) | Median EV/NTM Revenue |
|---|---|
| High growth (>22%) | 16.3x |
| Mid growth (15–22%) | 5.0x |
| Low growth (<15%) | 3.0x |
| Top five multiples | 28.9x |
| All public cloud software | 3.4x |
Source: Clouded Judgement (Jamin Ball), Jun 5, 2026: enterprise value (market cap + debt − cash) divided by next-twelve-months revenue. Bessemer's BVP Nasdaq Emerging Cloud Index reports an average multiple, which runs above these medians. Track public comps at the SaaS Valuations Dashboard.
Private SaaS Company Valuations by Stage
Value Add VC framework (not market data). The stage ranges below are our working rules of thumb, not a sourced dataset. Private market pricing follows a different logic. Investors use ARR multiples rather than NTM revenue multiples because forward projections are less auditable. The discount to public reflects illiquidity, shorter track records, and binary execution risk.
$0–1M ARR
Typically $8–15M pre-money on product + team alone. ARR multiples don't apply at this stage.
$1–5M ARR
Growth rate matters most. 100%+ growth can push to 12–15x. Sub-50% growth lands at 4–6x.
$5–20M ARR
NRR becomes critical. 120%+ NRR with 80%+ growth can command 18–25x. Median round: 10–12x ARR.
$20M+ ARR
Now approaching public comparables. Discount narrows to 15–25%. Rule of 40 is heavily weighted.
Why the Private SaaS Discount Exists
The 30–50% discount to public comps in our framework (not market data) isn't arbitrary. It reflects four compounding risk factors that private investors price in:
Illiquidity premium
No public market exit for 5–10 years. Investors demand 25–35% annual return to compensate, which mechanically compresses entry multiples.
Shorter track record
A public company with 8 quarters of consistent execution is less risky than a private company with 4 quarters. More data = higher multiple.
Execution risk
Private companies are still proving whether their go-to-market, retention, and expansion motion works at scale. Public peers have already proven it.
Comparables noise
Public SaaS comps include the top 20% of the cohort that survived to IPO. The average private SaaS company would not make the cut, so a discount is warranted.
When Private SaaS Commands Public-Equivalent Multiples
The discount compresses — sometimes disappears entirely — for companies that check specific boxes. Late-stage private rounds have priced at or above what the company would trade at as a public comp:
100%+ ARR growth sustained for 3+ years
Investors pay for compounding, not current ARR. The long-term EV justifies a compressed discount.
130%+ net revenue retention
The best leading indicator of durable revenue. NRR above 130% signals a product that sells itself via expansion.
Sole-source position in a regulated vertical
Switching costs are so high that future revenue is near-certain. Investors pay for certainty.
IPO-visible path (12–18 months)
The illiquidity discount collapses when the liquidity event is near. Pre-IPO rounds often price within 15–20% of anticipated public multiple.
Competitive round with multiple term sheets
Supply and demand is real. A hot Series B with four competing terms gets bid up regardless of comps.
What the 2021–2026 Cycle Taught Us
The SaaS valuation correction of 2022–2023 was brutal precisely because private valuations lagged the public correction. Clouded Judgement's public median fell from 13.5x on Nov 26, 2021 to 4.9x on Nov 18, 2022 — about 64% in a year. Private company boards and founders were in denial for 12–18 months longer.
What emerged from the wreckage: the relationship between public and private SaaS pricing is tighter than most people thought. When public comps reprice, private rounds follow within 2–4 quarters — not 2 years. Founders who tried to hold 2021 multiples into 2023 either couldn't close rounds or took severe down rounds.
The practical lesson: use current public comps, apply the appropriate stage discount, and triangulate against recent comparable private rounds from Carta or PitchBook data. Don't anchor on what the market paid 18 months ago. Track the live SaaS landscape at the SaaS Valuations Dashboard and compare against SaaS benchmarks.
The Metrics That Move Your Multiple
If you're a founder preparing for a raise, these are the levers with the most valuation impact — roughly in order of magnitude:
| Metric | Below Median | Median | Top Quartile |
|---|---|---|---|
| ARR Growth (YoY) | <40% | 50–80% | 100%+ |
| Net Revenue Retention | <100% | 105–115% | 120%+ |
| Gross Margin | <65% | 70–75% | 80%+ |
| Rule of 40 | <20 | 35–45 | 60+ |
| CAC Payback (months) | >24 mo | 12–18 mo | <12 mo |
The valuation conversation is simpler than founders make it:
Find the right public comps, apply a 30–40% illiquidity discount, then negotiate up from there based on your NRR, growth rate, and how much demand you can create in the process. That's the entire playbook.
Track private and public SaaS multiples live at the SaaS Valuations Dashboard.
Compare private and public SaaS multiples side by side on the SaaS Valuations Dashboard and run your own benchmarks at Benchmarking on Value Add VC. Originally published in the Trace Cohen newsletter.
Latest from the Pulse
Get VC data most people never see
— free to subscribe
Trace's notes on venture, AI and startups, a few times a week. Join 5,000+ subscribers. No spam.
No spam, unsubscribe anytime. Sent via Substack · Privacy · or subscribe on Substack ↗