What the Startup Valuation Calculator Does
This calculator gives you a fast, back-of-the-envelope estimate of what a startup might be worth using one of two standard market multiples: Price-to-Sales (P/S) or Price-to-Earnings (P/E). You enter your financials, pick a method, and the tool returns both a current valuation and a projected valuation one year out based on your growth rate. It is a useful sanity check for founders, angel investors, and anyone benchmarking a company against comparable deals.
The Inputs Explained
- Annual Revenue – your company's current top-line sales for the year.
- Annual Growth Rate (%) – the percentage you expect revenue to grow over the next year. This drives the projected figures.
- Profit Margin (%) – net profit as a percentage of revenue. This is used to derive profit for the P/E method.
- Valuation Method – choose P/S (Price to Sales) or P/E (Price to Earnings).
- Industry Multiple – the comparable multiple for your sector (e.g. 5× sales or 15× earnings).
The Formula
The calculator first works out the underlying numbers:
- Current Profit = Revenue × (Profit Margin ÷ 100)
- Projected Revenue = Revenue × (1 + Growth Rate ÷ 100)
- Projected Profit = Projected Revenue × (Profit Margin ÷ 100)
It then applies your chosen multiple:
- P/S method: Current Valuation = Revenue × Multiple; Projected Valuation = Projected Revenue × Multiple
- P/E method: Current Valuation = Current Profit × Multiple; Projected Valuation = Projected Profit × Multiple
Worked Example
Suppose a SaaS startup has $2,000,000 in annual revenue, a 30% growth rate, and a 20% profit margin, and you choose the P/S method with a 6× multiple.
- Current Profit = $2,000,000 × 0.20 = $400,000
- Projected Revenue = $2,000,000 × 1.30 = $2,600,000
- Current Valuation (P/S) = $2,000,000 × 6 = $12,000,000
- Projected Valuation (P/S) = $2,600,000 × 6 = $15,600,000
Switch to the P/E method with, say, a 15× multiple and the current valuation becomes $400,000 × 15 = $6,000,000.
FAQ
Should I use P/S or P/E? Use P/S for early-stage or pre-profit companies where earnings are thin or negative. Use P/E for profitable, mature businesses where the multiple reflects bottom-line performance.
Where do I find the right industry multiple? Look at recent funding rounds, public-company comparables, or industry reports in your sector. SaaS often trades at higher revenue multiples than service or hardware businesses.
Is this a precise appraisal? No. It is an estimate for comparison and discussion. Real valuations also factor in team, market size, churn, cash position, and negotiation. Treat the output as a starting point, not a final number.
