It seems every day there’s not just a new SaaS unicorn, but 2 or 3!  How can this be?  How can there now be 100s of SaaS Unicorns (startups worth $1B or more) … vs just a handful 5-6 years ago?

The technical reasons are two-fold:

  • SaaS markets have exploded, so there are more and more vendors that get to $100m+ ARR.  And hence a unicorn or even more, assuming 30%+ growth rate at $100m ARR.
  • SaaS “multiples” are at an all-time high, so a fast-growing SaaS company can be worth $1B earlier than a few years ago.

The combo makes for more SaaS unicorns just by the numbers.  More SaaS companies growing fast enough to get to $100m ARR x stock market valuing them 3x higher than before = lots-of-‘corns.

But there’s an even simple answer:

The average public SaaS company is now worth a stunning $27B.  And even the newest IPOs, and the up-and-comers … the ones with a sub-$30B market cap, are still worth $10B on average:

So a large VC firm can still make really good money — 10x — by investing in any SaaS / Cloud winner at a $1B valuation.  And still make 10x on a big, late-stage check.

And 10x is even repeatedly possible at a $3B valuation, if you become an Okta, a Coupa, a Datadog, a Zscaler, a Veeva, a Cloudstrike, a RingCentral, etc.  All are worth ~$30B or more.

With so many SaaS leaders worth $10B on average, and $27B for the top ones, that means late-stage VC are making 100s of bets at $1B or more.

The math just supports it.

More on those Cloud leaders’ market caps here, and various averages here:

The Super-Simple Guide to What VCs are Looking For Today


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