ARR: the valuation anchor, and MRR: The momentum indicator! I love this breakdown, so relevant with the AI bubble talk and the mega funded AI startups we're seeing today.
Chris you've brilliantly stripped away the mystique around SaaS valuation and made it actionable. The progression from "ARR is your anchor" to "growth multiplies value" to "narrative sells the vision" creates a perfect framework that founders can actually use in investor meetings.
In my opinion, the biggest valuation killer is metric inconsistency. Founders who define ARR differently in their deck vs. their data room, or who can't explain why their MRR growth doesn't match their ARR claims. Investors smell this immediately, and it destroys trust faster than high churn ever could.
The other piece many founders miss is timing their valuation story. Early-stage companies often try to justify mature-stage multiples with growth metrics, when they should be selling potential. Late-stage companies sometimes still pitch like startups when they need to demonstrate operational excellence. The stage-appropriate mindset shift you outlined is crucial.
I know you didn't ask for this but one writing tip you can use to amplify this article's impact is opening with a specific scenario instead of the general "founder face" observation. Something like: "Sarah's Series A pitch started strong... $2M ARR, 80% growth, impressive logos. Then I asked about her unit economics. Silence. Her $20M valuation ask suddenly felt like wishful thinking."
Ghostwriting weekly newsletters for C-suite executives has taught me that a concrete example immediately demonstrates the stakes and makes the abstract concept of "valuation narrative" tangible. Readers can picture themselves in Sarah's shoes and feel the urgency to master these concepts. It transforms your advice from theoretical knowledge into "I need to know this before my next meeting" practical wisdom.
Valuation really does sit in that space between art and arithmetic. What I’ve seen time and again is how much confidence grows once founders grasp the key levers investors actually care about rather than trying to spin a story.
Amazing post Chris!
Glad you like it - part of a series and inspired by my new Book out this week ! The Big Book of BrainDumps 🧠💩
Great job simplifying this - the sheer volume of metrics is overwhelming at first. Every founder should read this
The 101 of metrics could easily be the 101 metrics 😂 or the 101 pages of metrics 😬
ARR: the valuation anchor, and MRR: The momentum indicator! I love this breakdown, so relevant with the AI bubble talk and the mega funded AI startups we're seeing today.
Yes. Very true. With AI we're looking for usage as a major indicator that growth is real 🌟
Chris you've brilliantly stripped away the mystique around SaaS valuation and made it actionable. The progression from "ARR is your anchor" to "growth multiplies value" to "narrative sells the vision" creates a perfect framework that founders can actually use in investor meetings.
In my opinion, the biggest valuation killer is metric inconsistency. Founders who define ARR differently in their deck vs. their data room, or who can't explain why their MRR growth doesn't match their ARR claims. Investors smell this immediately, and it destroys trust faster than high churn ever could.
The other piece many founders miss is timing their valuation story. Early-stage companies often try to justify mature-stage multiples with growth metrics, when they should be selling potential. Late-stage companies sometimes still pitch like startups when they need to demonstrate operational excellence. The stage-appropriate mindset shift you outlined is crucial.
I know you didn't ask for this but one writing tip you can use to amplify this article's impact is opening with a specific scenario instead of the general "founder face" observation. Something like: "Sarah's Series A pitch started strong... $2M ARR, 80% growth, impressive logos. Then I asked about her unit economics. Silence. Her $20M valuation ask suddenly felt like wishful thinking."
Ghostwriting weekly newsletters for C-suite executives has taught me that a concrete example immediately demonstrates the stakes and makes the abstract concept of "valuation narrative" tangible. Readers can picture themselves in Sarah's shoes and feel the urgency to master these concepts. It transforms your advice from theoretical knowledge into "I need to know this before my next meeting" practical wisdom.
Valuation really does sit in that space between art and arithmetic. What I’ve seen time and again is how much confidence grows once founders grasp the key levers investors actually care about rather than trying to spin a story.