Scaling SaaS videos: SaaS valuations explained
For SaaS businesses that have moved beyond Series A, valuation conversations have changed. The market is no longer rewarding ambition alone. Instead, investors are looking for discipline, clarity and credible financial foundations.
In this short video, Ryan Day, Head of Technology at Moore Kingston Smith, speaks with Paul McKeown, Valuations Partner, about what is really driving SaaS valuations today and what CFOs should be focusing on as they prepare for further fundraising, strategic planning or exit.
Complexity is increasing, but simplicity still wins
SaaS platforms are becoming more complex. Many businesses are evolving towards modular, flexible architectures that allow multiple developments to run in parallel, with different components interacting across the platform. AI is increasingly part of that picture.
But from a valuation perspective, complexity alone does not create value. What matters is whether that complexity delivers a specific, customer-led solution that solves a clear problem and can scale profitably over time.
For CFOs, this means being able to articulate not just what the technology does, but why it matters commercially, specifically:
- Who the solution is for.
- What problem it solves.
- How much solving that problem is worth to the customer.
- How the solution scales in a sustainable way.
AI may be a differentiator but, without a clear commercial application and economic logic, it is unlikely to move the valuation needle.
Revenue multiples still matter – but only with credible profit visibility
Valuations of SaaS businesses have historically been driven by revenue multiples, often with a focus on annual recurring revenue. That has not disappeared, but expectations are more demanding.
For businesses between funding rounds, investors are looking for visibility on profits over a clear timeframe, supported by a robust and well-evidenced business model. High-level statements about market share or future dominance are no longer enough.
Instead, investors want to see bottom-up planning that answers such fundamental questions as:
- What exactly does the business do?
- How does it make money?
- What does it cost to deliver?
- How long will it take to scale?
- When does profitability become sustainable?
Where CFOs can provide credible answers to these questions, sound valuations tend to follow.
Valuation is contextual and depends on the investor
One common misconception is that a business has a single ‘correct’ valuation. In reality, value depends on who the buyer or investor is, their objectives and their appetite for risk.
A going concern valuation may be useful for some purposes, but it may not reflect how different investors approach value. This is particularly relevant when businesses are raising capital, restructuring or preparing for exit.
It is also why CFOs are increasingly involved in valuation exercises for a range of scenarios, including investment rounds, option schemes, internal planning and strategic decision making.
Credibility beats narrative
Strong leadership teams and compelling stories still matter, particularly in earlier-stage businesses. However, at £10 million+ revenue, credibility increasingly comes from the numbers.
Investors want to see financial information that is coherent, bottom-up and believable. Where the story and the data align, there is still appetite for investment, even where risk remains.
Ultimately, valuations are back to fundamentals. Businesses that understand their value drivers, manage them actively and communicate them clearly are best placed to attract capital and achieve strong outcomes.
How Moore Kingston Smith can help
Moore Kingston Smith works with SaaS CFOs and leadership teams on valuations for fundraising, strategic planning, employee incentives and exit readiness. Our technology specialists understand both the commercial realities of scaling SaaS businesses and the valuation frameworks investors expect.
If you would like to discuss how valuation fits into your next stage of growth, get in touch with our technology and valuations team.
