Mostly metrics is proudly powered by Fidelity Private Shares

Free cap table template for CFOs who like to plan ahead

Even the cleanest spreadsheet can hit its limits. This free cap table template by Fidelity Private Shares can help early-stage teams track equity clearly and correctly, while setting the stage for a seamless transition to a more scalable solution when needed.

  • Pre-formatted for equity events (ex: SAFEs, options, dilution)

  • Audit-friendly and investor-ready structure

  • Fully editable, built for early-stage use

  • Easy migration to the Fidelity Private Shares (FPS) platform when you’re ready to scale

Download Template

Yo, it's CJ! Welcome back to my newsletter for current and aspiring CFOs. My goal is to make YOU better at your job by covering

  • SaaS metrics

  • Fundraising

  • AI use cases in finance

  • Pricing + GTM ops

All in a way you can actually understand.

I also help with two things that keep CFOs up at night: picking the right software and hiring the right people.

Blockbuster IPO Liquidity

There are some major IPOs on the horizon, and these companies are hungry, hungry hippos in terms of their capital intensity.

Two things:

  1. These IPOs are going to SMASH all valuation and raise records.

    1. OpenAI, SpaceX, and maybe, just maybe, Anthropic could be valued at +$1 trillion (and yes, this feels v. silly to write).

      1. OpenAI already raised two private rounds ($50B in 2025 and $105B in 2026) larger than anything we’ve ever seen at IPO (the largest IPO was Saudi Aramco, with ~$29B raised in 2019).

    2. That means they will suck a combined $300 billion to $500 billion in capital out of the system

  2. That liquidity has to come from somewhere. Capital travels in pools.

    1. Yes, there is “dry powder” as the cool kids say “on the sidelines”.

    2. But it’s not unlimited. And regardless, money finds its best home.

    3. The T. Rowe Prices and massive mutual funds of the world will need to pull capital out of other areas to plow it into these IPOs.

      1. So will the late stage private + cross over investors who are increasingly encroaching on each other’s territories

    4. So the question becomes: who subsidizes nearly half a trillion in liquidity across the big three?

I was in Florida during Hurricane Ian.

If you saw the photos, something surreal happened.

In Tampa Bay, the water disappeared. Poof.

The wind literally pushed the ocean away from the coast, leaving boats perched on mud and allowing people to walk where the ocean usually was.

Meanwhile, 150 miles south in Naples, the opposite was happening.

All that water was getting dumped onto the shore. Streets flooded. Homes flooded. It looked absolutely biblical.

And the water didn’t come from one specific place. It came from the entire system being pushed in one direction.

That’s what’s about to happen in capital markets.

More specifically, the funding is going to get pushed away from late stage private + pure play SaaS public companies.

If you liked Salesforce and Hubspot and Intuit at 2x, you’re going to LOVE them at 1.2x once the crossovers and massive mutual funds like Capital Group, Wellington, and Putnam move their allocations from one pocket to the other.

Think about it… if you can put $250 million to work in one shot by plowing it into Anthropic, why would you want to put $25M in one late stage company and $35M in the next, and basically cobble together a diversified exposure to less sexy mature SaaS companies? It doesn’t make sense from a time perspective (it takes time to do all that diligence and sit on all those boards). And there’s a lot of perceived risk in traditional SaaS companies without an AI first story.

Anywho…

Here’s my best guess at who will go public over the next 12 months, in order. You can bookmark this later and give me tons of shit when I inevitably get it wrong. But hey, I don’t want to hedge. No fun.

  1. Anthropic.

    1. Per The Information, they’ve hired their lawyers already. And you do that before hiring the bankers (a lot of people don’t know that! you want to have the lawyers picked before the bankers so they can help you negotiate the rates and fees with the bankers)

    2. Using some basic game theory, if you’re going to go in the same year as OpenAI, who has more revenue and a higher valuation, you’d prob want to go first rather than second to front run the demand and not be the “second and smaller IPO”

    3. Plus, Anthropic is coming off an incredible year (sans the Pentagon shit), scaling from like $4 billion to $20 billion in like 15 months. If OpenAI won 2023 and 2024, Anthropic won 2025. As Rory O’Driscoll of Scale Ventures quipped on 20 minute VC: It’s now 2 years to 1 one, OpenAI.

  2. OpenAI

    1. They picked their lawyers this month.

    2. But a TON of their forecast is built on an ad model that hasn’t been proven out yet.

    3. They need more time to show the proof to get the valuation they want.

  3. SpaceX

    1. While not yet “official” it’s well known that Elon Musk works closely with Morgan Stanley banking leader Michael Grimes, who helped him take Tesla public and buy Twitter.

    2. I think they could be further along in the IPO process than Anthropic but they also keep smashing businesses together (SpaceX, Grok, xAI, maybe even your favorite local Buffalo Wildwings)

    3. The SpaceX portion of the company recently raised in the the $750B range

    4. But its also been private for over 20 years (I know, I had to double check that… wild) and doesn’t seem to be in a rush to go public

  4. DataBricks

    1. Shout out to the alphabet, which DataBricks ran through

    2. No one had given Series L any love since Palantir.

    3. They recently passed Snowflake, their closest public comp, in revenue. It was a passing of the guards, of sort.

    4. And SNOW is trading at like 10x NTM revenue

    5. DataBricks is trading at ~30x current run rate revenue and +~20x NTM revenue

    6. Why would they want to potentially cut their valuation by 30% to 50%?

    7. They’re likely fairly ready to IPO, and their CFO is Dave Conte, a legend who took Splunk public.

    8. But I doubt they are eager to crystallize a lower valuation

  5. Canva

    1. A software company layering in AI, rather than an AI native company.

    2. They probably need a story to the market of being an AI native company and the growth rate that comes with that

    3. Figma is getting beat up in a way that Canva might

    4. Their last valuation was at $40 billion. But even at 10x forward revenue, it could cut the company’s valuation by 50% to 60%

So that’s my 5 team parlay.

Oh, and here’s me and Kyle discussing all of the above on our podcast Mostly Growth. It’s great, or it sucks, idk you tell us.

Apple | Spotify | YouTube

Data source: Koyfin

TL;DR: Medan Multiples are DOWN week over week.

The overall tech median is 3.2x (DOWN 0.2x w/w).

What Great Looks Like - Top 10 Medians:

  • EV / NTM Revenue = 13.6x (FLAT w/w)

  • CAC Payback = 32 months

  • Rule of 40 = 50%

  • Revenue per Employee = $675k

Data source: Koyfin

Subscribe

Data source: Koyfin

  • Figures for each index are measured at the Median

  • Median and Top 10 Median are measured across the entire data set, where n = 144

  • Recent changes

    • Added: Navan, Bullish, Figure, Gemini, Stubhub, Klarna, Figma

    • Removed: Jamf, OneStream, Olo, Couchbase, Dayforce, Vimeo

  • Population Sizes:

    • Security & Identity = 17

    • Data Infrastructure & Dev Tools = 13

    • Cloud Platforms & Infra = 15

    • Horizontal SaaS & Back office = 17

    • GTM (MarTech & SalesTech) = 18

    • Marketplaces & Consumer Platforms = 18

    • FinTech & Payments = 28

    • Vertical SaaS = 17

Revenue Multiples

Revenue multiples are a shortcut to compare valuations across the technology landscape, where companies may not yet be profitable. The most standard timeframe for revenue multiple comparison is on a “Next Twelve Months” (NTM Revenue) basis.

NTM is a generous cut, as it gives a company “credit” for a full “rolling” future year. It also puts all companies on equal footing, regardless of their fiscal year end and quarterly seasonality.

Data source: Koyfin

However, not all technology sectors or monetization strategies receive the same “credit” on their forward revenue, which operators should be aware of when they create comp sets for their own companies. That is why I break them out as separate “indexes”.

Reasons may include:

  • Recurring mix of revenue

  • Stickiness of revenue

  • Average contract size

  • Cost of revenue delivery

  • Criticality of solution

  • Total Addressable Market potential

From a macro perspective, multiples trend higher in low interest environments, and vice versa.

Multiples shown are calculated by taking the Enterprise Value / NTM revenue.

❝

Enterprise Value is calculated as: Market Capitalization + Total Debt - Cash

Market Cap fluctuates with share price day to day, while Total Debt and Cash are taken from the most recent quarterly financial statements available. That’s why we share this report each week - to keep up with changes in the stock market, and to update for quarterly earnings reports when they drop.

Historically, a 10x NTM Revenue multiple has been viewed as a “premium” valuation reserved for the best of the best companies.

Efficiency

Companies that can do more with less tend to earn higher valuations.

Data source: Koyfin

Three of the most common and consistently publicly available metrics to measure efficiency include:

CAC Payback Period: How many months does it take to recoup the cost of acquiring a customer?

❝

CAC Payback Period is measured as Sales and Marketing costs divided by Revenue Additions, and adjusted by Gross Margin.

Here’s how I do it:

  • Sales and Marketing costs are measured on a TTM basis, but lagged by one quarter (so you skip a quarter, then sum the trailing four quarters of costs). This timeframe smooths for seasonality and recognizes the lead time required to generate pipeline.

  • Revenue is measured as the year-on-year change in the most recent quarter’s sales (so for Q2 of 2024 you’d subtract out Q2 of 2023’s revenue to get the increase), and then multiplied by four to arrive at an annualized revenue increase (e.g., ARR Additions).

  • Gross margin is taken as a % from the most recent quarter (e.g., 82%) to represent the current cost to serve a customer

  • Revenue per Employee: On a per head basis, how much in sales does the company generate each year? The rule of thumb is public companies should be doing north of $450k per employee at scale. This is simple division. And I believe it cuts through all the noise - there’s nowhere to hide.

❝

Revenue per Employee is calculated as: (TTM Revenue / Total Current Employees)

  • Rule of 40: How does a company balance topline growth with bottom line efficiency? It’s the sum of the company’s revenue growth rate and EBITDA Margin. Netting the two should get you above 40 to pass the test.

❝

Rule of 40 is calculated as: TTM Revenue Growth % + TTM Adjusted EBITDA Margin %

A few other notes on efficiency metrics:

  • Net Dollar Retention is another great measure of efficiency, but many companies have stopped quoting it as an exact number, choosing instead to disclose if it’s above or below a threshold once a year. It’s also uncommon for some types of companies, like marketplaces, to report it at all.

  • Most public companies don’t report net new ARR, and not all revenue is “recurring”, so I’m doing my best to approximate using changes in reported GAAP revenue. I admit this is a “stricter” view, as it is measuring change in net revenue.

OPEX

Decreasing your OPEX relative to revenue demonstrates Operating Leverage, and leaves more dollars to drop to the bottom line, as companies strive to achieve +25% profitability at scale.

Data source: Koyfin

The most common buckets companies put their operating costs into are:

  • Cost of Goods Sold: Customer Support employees, infrastructure to host your business in the cloud, API tolls, and banking fees if you are a FinTech.

  • Sales & Marketing: Sales and Marketing employees, advertising spend, demand gen spend, events, conferences, tools.

  • Research & Development: Product and Engineering employees, development expenses, tools.

  • General & Administrative: Finance, HR, and IT employees… and everything else. Or as I like to call myself “Strategic Backoffice Overhead.”

All of these are taken on a Gaap basis and therefore INCLUDE stock based comp, a non cash expense.

Please check out our data partner, Koyfin. It’s dope.

Wishing you formidable yet scalable R&D investments,

CJ

Reply

Avatar

or to participate

Keep Reading