What is B2B SaaS-specific valuation and what metrics matter most?

Full Explanation

B2B SaaS has become the valuation standard for venture capital, with clear financial models: monthly recurring revenue (MRR) scales predictably, customer lifetime value (LTV) can be calculated precisely, and cash flow becomes visible. Key metrics: 1) ARR (total annual contract value), 2) NRR (are existing customers expanding?), 3) CAC payback period (how many months of revenue to break even on acquisition cost?), 4) Magic Number (quarterly new ARR / previous quarter CAC spend), 5) Gross margin (revenue minus cost of goods sold; 70%+ is healthy). Valuation multiples: growth-stage B2B SaaS trades at 10-20x ARR (high-growth, 50% YoY+), 5-10x ARR (moderate growth 20-30%), and 2-5x ARR (slow growth <20%). The formula roughly: valuation = ARR × growth multiple. For example, £10M ARR at 50% growth × 12x multiple = £120M valuation. Intangible assets in B2B SaaS: brand (switching costs), customer relationships (product stickiness), technology (defensibility), and team (execution). Relief from Royalty works well (comparable SaaS licences), and MPEEM (customer relationship value). For SaaS founders: focus on unit economics and retention. Valuations follow from those metrics. Opagio integrates SaaS-specific metrics and benchmarks.

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