If you're running a business generating annual revenue, you’re already in rare territory. (I know, that sounds surprising, doesn't it?) As you consider that revenue and you look ahead, you have an opportunity to take investors and use growth capital. Next up, putting a valuation on your company. Oftentimes a dreaded next step for entrepreneurs. 

Valuations are a somewhat like salaries -- oddly taboo to talk about. Leaving founders without knowledge of where they fall on the spectrum, and they often assume their multiple is either too high or too low. The reality? There’s no universal number—valuation depends on growth, profitability, and efficiency.

Benchmarking Your Success

Jamin Ball’s latest Clouded Judgement newsletter outlines some key trends in valuing companies, particularly in SaaS, but the principles extend across industries. (If you haven't already subscribed, you should. This is a must-read for us weekly. Jamin is exceptional at breaking down nearly every metric that matters to entrepreneurs.)

As it relates to seeking capital for your company, here's what you can discuss with each investor you consider partnering with:

• Revenue Multiples Matter:  ask how the firm places a multiple on your industry's revenue. For example, we like to over simplify and say it is 4X one year's revenue for a low-margin business and for something with a higher margin we're sometimes willing to go up to 7X.

• Growth and Profitability Work Together: make sure you understand how this capital partner expects you to manage growth while maintaining cash reserves and/or in our fund's cash your buyouts. 

• Free Cash Flow Is King: Companies with positive free cash flow see stronger valuations. Investors and acquirers want to see that, beyond revenue, you’re running a business with efficient cash management.

Leverage Capital Without Losing Your Company

One of the toughest decisions founders face is how to fund growth without giving away too much equity. Traditional venture capital often means significant dilution, while bank loans can be restrictive. Proven Ventures is designed to offer an alternative—capital that fuels your business without forcing you to give up a massive stake in your company.

What’s Next?

If you want to:

• Benchmark your company’s valuation more accurately,

• Explore capital options that don’t drain your ownership,

• Learn strategies to maximize growth and profitability,

We’re here to help. And if you’re serious about taking your business to the next level without sacrificing your equity, email me directly at erica@proven.ventures. Let’s talk.