There is no formula
Private valuation is not calculated; it is negotiated within a range suggested by comparable transactions. The common anchors are revenue multiples (ARR × multiple), growth-adjusted multiples, and — rarely, at later stages — discounted cash flow.
Revenue multiples
The blunt instrument of private markets: Enterprise value ≈ ARR × multiple. The multiple reflects growth rate, gross margin, retention, capital efficiency, and market appetite. The same company can be worth 6× in one market and 15× in another.
What actually moves the number
- Growth rate and its durability
- Net revenue retention
- Gross margin and unit economics
- Competitive tension in your round
A caution
A high valuation is a promise about your next round. Price a round above what your next 18 months can justify and you inherit a down round.
Use the Academy calculators to explore ranges. They are educational models, not valuations.
Key takeaways
- Private valuation is a negotiation anchored on comparables
- Multiples move with market conditions, not just performance