SaaS Valuation Multiples: 2015-2026 Historical Chart and Analysis
From 8.8x in 2015 to a 16.9x peak in August 2021, down to 3.2x in June 2026. The complete story of the SaaS bubble, the rate-cycle compression, and the AI re-rating, from the official SaaS Capital Index data file.
Year-by-Year SaaS Capital Index Median ARR Multiple
| Period | Median EV/Revenue | Market Context |
|---|---|---|
| Dec 2015 | 8.8x | SaaS sector established; pre-IPO-boom |
| Dec 2016 | 6.0x | 2016 growth-stock pullback |
| Dec 2017 | 7.6x | Cloud adoption broadens |
| Dec 2018 | 8.0x | Enterprise cloud migration accelerates |
| Dec 2019 | 9.8x | SaaS IPO boom (Zoom, CrowdStrike, Datadog) |
| Dec 2020 | 16.9x | COVID tailwinds; ZIRP; digital acceleration |
| Aug 2021 | 16.9x | PEAK (all-time high of the series) |
| Dec 2021 | 13.7x | Compression already underway by year-end |
| Jun 2022 | 7.6x | Rate hikes; growth stocks sell off |
| Dec 2022 | 6.5x | Valuations reset; 'growth at all costs' ends |
| Dec 2023 | 7.0x | Stabilisation; focus on profitability |
| Dec 2024 | 7.0x | Sideways in a 5.7-7x band; Rule of 40 dominates |
| Dec 2025 | 5.6x | Drifting lower as AI concerns build |
| Mar 2026 | 3.7x | Sharp Q1 re-rating on AI disruption fears |
| May 2026 | 3.4x | Compression continues through spring |
| Jun 2026 | 3.2x | Current median; lowest reading since 2011 |
What Caused the 2021 Peak
The 16.9x median (December 2020 and again in August 2021) required an extraordinary confluence of factors:
The Fed held rates at 0-0.25% from March 2020 to March 2022. Near-zero discount rates mathematically inflate the present value of future cash flows. A company expected to generate $1B in free cash flow in 10 years is worth vastly more when discounted at 0.5% vs 5%.
Remote work, e-commerce acceleration, and enterprise cloud migration created a genuine step-change in SaaS demand. Companies were growing at 80-150% YoY and investors extrapolated those rates forward.
Special Purpose Acquisition Companies (SPACs) created an alternative IPO path with weaker governance. At the peak, SPACs were acquiring SaaS companies at 30-50x EV/Revenue with limited scrutiny.
By mid-2021, every major VC fund was raising record growth rounds. Founders who raised at 30x ARR were immediately described as visionary. Competition for deals pushed valuation expectations upward in a self-reinforcing cycle.
What Caused the 2022-2024 Compression
The reversal was swift and severe. The Federal Reserve raised rates from 0.25% to 5.25% between March 2022 and July 2023, the fastest rate-hiking cycle in four decades. Three mechanisms drove the compression:
First, the DCF mechanism: every 1% increase in the risk-free rate reduces the present value of future cash flows. Growth companies with most of their value in years 5-10 of projections are most exposed. A company previously discounted at 3% now discounted at 8% loses 30-40% of its DCF value instantly.
Second, growth deceleration: the COVID pull-forward normalised. Companies that grew at 80-100% during 2020-2021 reverted to 20-40% growth. Not because their businesses broke, but because the baseline comparison became harder and the extraordinary tailwinds faded.
Third, the end of “growth at all costs”: Sequoia's “R.I.P. Good Times” memo in May 2022 crystallised a shift in investor expectations. Burn multiples above 2x were suddenly disqualifying. Companies that had raised at 30x ARR while burning aggressively faced a brutal re-rating.
2023-2025: The False Floor
From 2023 through 2025 the median held a 5.6-7x band, and it looked like the post-rate-cycle new normal: roughly where multiples sat in 2018-2019 before the ZIRP-era inflation. The Rule of 40 became the dominant screening metric and profitability was rewarded again. SaaS Capital described the multiple as range-bound from late 2022 through late 2025.
Q1 2026: The AI Re-Rating
The floor gave way at the start of 2026. The median fell from 5.6x in December 2025 to 4.8x in January, 3.6x by February, 3.4x by May, and 3.2x by June, the lowest reading in the series since 2011. SaaS Capital's own commentary (April 2026) attributes the move to “growing concern that AI posed an existential risk to the SaaS business model.” Unlike 2022, this was not a discount-rate story: rates were broadly stable while the multiple halved.
The re-rating is also a growth story. By June 2026, only 6 of the 58 index constituents reporting trailing growth grew faster than 30%, and the median constituent grew just 14.2%. Investors are repricing a sector whose median company now grows like a mature industrial, while asking whether AI agents will compress seat-based pricing further. Whether this is an overshoot or the start of structural decline is the central open question for every SaaS founder timing an exit.