alt Hacker NewsWhat does it take to get a good outcome in the 2-20m ARR exit space?
When I read PE multiples in the 3-5x ARR range, it seems like a fire sale compared to valuation prices. At 3x, you might just be giving it all back in liquidation preferences.
Am I missing something, or is this just founders who are sick of running the business and want to do something else, or are there lots of capital efficient companies in this range where 3-5x revenue is a good deal?
So transaction multiples for us tend to be 5-8x (higher over $10M ARR), with outliers to 15-20x+
But the bigger issue is what you’re alluding to - lots of founders don’t really understand what doors they’re closing when raising a shit ton of cash. If you’ve raised $100M and are worth $50M, not a lot of good outcomes come easily (though I have helped a couple of founders navigate those waters too. Not always successfully)
Fact is - there are many more $50-200M outcomes than $1bn outcomes and if you’ve raised yourself into a corner where you don’t make any money unless you hit $1bn, well then better hope you took some secondary during fundraising.