There are only 3 ways to exit a startup.

The most common way to convey startup “wins” is to discuss:

The Multiple

This can be expressed myriad ways depending on what Baskin Robbins flavor of financial engineering accounting / valuation the investor prefers.

Some of the more common flavors:

Revenue Multiple

This is the most commonly discussed and sometimes straightforward metric:

If the business is generating $20M of Revenue and sells for $100M, then it achieved a

5x

TVPI

Which stands for Total Value Paid In.

This is a fund-level multiple, not a company-level one. It’s used by LPs and VCs to measure the performance of a fund:

This metric can easily be juiced if the investment firm has aggressively marked up the paper Residual Value of the companies on its balance sheet.

If a VC fund has returned $50M to LPs and still holds $200M in portfolio value, on $50M invested, TVPI =

5x

Rule of 40

This rule says a healthy SaaS (Software-as-a-Service) company should aim for:

Growth Rate % + Profit Margin % > 40%

Companies that out-perform 40% will sell for a bigger Revenue multiple.

The median revenue multiple for SaaS companies dropped to:

5.8x in Q1 2025

down from

around 10x in 2024