saas-valuation-compression

Research each round's post-money valuation and ARR via web search, compute the ARR multiple per round, then calculate compression percentage between consecutive rounds. Attribute the change using a checklist covering macro rates, growth deceleration, narrative shifts, AI premium, competition, and investor demand.

Estimate ARR from customer count multiplied by average deal size, or use stage heuristics: seed and Series A often $500K–$3M, Series B typically $5M–$20M, Series C typically $20M–$60M. Always label estimated figures with a plus-or-minus range.

The most common cause is growth deceleration between rounds. Other drivers include ZIRP-era premium removal during rate hikes, sector-wide public software selloffs, lost narrative or category leadership, absent AI positioning, competitive saturation, and more selective investor demand.

Yes. Valuation multiplier equals ARR multiplier times multiple multiplier, so if ARR grows faster than the multiple compresses, absolute valuation still increases. The decomposition is additive only in log terms, which is how the breakdown charts sum correctly.

It requires at least two funding rounds; a single round can only be compared against the sector median for its date. Pre-revenue companies need forward ARR or GMV bases, and acquisition prices often reflect strategic premium or distress rather than pure ARR multiples.