      SaaStr · 2016-11-21
      · 3481d
    

SaaS Decacorn Valuations Justified Only if Market Grows 20-30x by 2021

Jason Lemkin argues that current SaaS unicorn valuations are only justified if the market experiences 20-30x growth in spending by 2021, driven by migration from on-premise software and expansion into SMB markets. He contends there must be 20-30 SaaS startups with growth trajectories exceeding Salesforce, Workday, and ServiceNow to support current valuations, with B2B SaaS following B2C adoption curves by 3-5 years.

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Metrics in this report

Facebook Valuation

300$B

approximately

B2C tech company at 10 years

Google Valuation

500$B

approximately

B2C tech company

Hot SaaS Startup Funding Multiple

20-40x ARR

range

Private SaaS startup valuation multiple

Public SaaS Revenue Multiple (Current Year)

6.5x

average

Public SaaS company valuation multiple

Public SaaS Revenue Multiple (Next Year GAAP)

5x

average

Public SaaS company valuation multiple

Required SaaS Market Growth

20-30x

minimum

Spending growth needed to justify unicorn valuations by 2021

Salesforce Valuation

50$B

approximately

Public SaaS company after 16 years

ServiceNow Valuation

14$B

approximately

Public SaaS company, third largest

Workday Valuation

16$B

approximately

Public SaaS company, second largest

YoY Growth Target for Mature SaaS

30%

minimum

Year-over-year growth expected from established players like Workday and Salesforce