If you are still using valuation benchmarks from 2021, please stop. Those numbers were a collective hallucination fueled by zero interest rates and too much coffee. We are now back in reality.
The 2025 US market has settled into a "New Normal."
It is not the doom and gloom of the 2023 crash, but it certainly isn't the "100x ARR" party of the pandemic years. For US-based founders, clarity is power. You cannot negotiate a term sheet if you don't know the baseline.
We analyzed data from the Bessemer Cloud Index, SaaS Capital, and private transaction reports to build the definitive cheat sheet for 2025 valuations.
The Data Magnet: 2025 Valuation Multiples
This is the table investors are looking at. Note that "ARR" (Annual Recurring Revenue) is the gold standard metric.
| Company Stage / Type | Median EV/ARR Multiple | Top Quartile (The "Premium") |
|---|---|---|
| Public SaaS (Bessemer Index) | 6.7x | 12.0x - 14.5x |
| Private VC-Backed (Series A-C) | 5.3x | 8.0x - 10.0x |
| Private Bootstrapped | 4.7x | 6.0x |
| AI / Vertical SaaS | 9.0x | 15.0x+ |
Data aggregated from public market indices and private transaction reports (Q1 2025).
The Three Drivers of Valuation
Why does one company trade at 4x and another at 12x? It is rarely about the "vision." In 2025, US investors are obsessed with three specific levers.
1. The "Rule of 40" is Law
Growth at all costs is dead. The market now rewards efficient growth. The "Rule of 40" adds your Revenue Growth % to your EBITDA Margin %.
- Below 40%: You are discounted.
- Above 40%: You earn a premium.
- Above 50%: You are a "Centaur" and can command double-digit multiples.
2. The AI Premium (Real vs. Wrapper)
There is a massive bifurcation in the market. "AI Wrappers"—thin layers over OpenAI models—are seeing their multiples collapse as retention struggles. However, Vertical AI (proprietary models solving deep industry problems) is trading at roughly 9x - 12x ARR. The market pays for defensibility, not just the .ai domain.
3. Retention is the New Growth
In a high-interest-rate environment, Net Revenue Retention (NRR) is the single biggest predictor of valuation.
- < 100% NRR: Your valuations will be capped at 3-4x.
- 120%+ NRR: This signals that your product grows automatically. This is the ticket to the top quartile (8x+).
Public vs. Private Discount
Historically, private startups traded at a premium to public stocks because of their growth potential. That has flipped. Today, private SaaS often trades at a ~20% discount to public peers (liquidity discount).
Unless you are growing 2x or 3x year-over-year, do not expect to outpace the public benchmarks.
Conclusion: What is your number?
For a standard, good US B2B SaaS company growing at 30% year-over-year:
- Expect offers in the 5x - 7x ARR range.
- If you want 10x, you need 120% NRR or a proprietary AI moat.
Stop chasing the outliers. Build a business that hits the Rule of 40, and the valuation will take care of itself.
