As long as I’ve been an investor, VCs have leaned on revenue multiples to justify valuations. These multiples have gone up and down over the years, but have been the cornerstone of setting valuations in the tech world. Unfortunately, these multiples have proven themselves to be useless in properly determining the true long-term value of businesses, and I think it’s high time to do away with them.
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Death to Revenue Multiples: Long Live the…
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As long as I’ve been an investor, VCs have leaned on revenue multiples to justify valuations. These multiples have gone up and down over the years, but have been the cornerstone of setting valuations in the tech world. Unfortunately, these multiples have proven themselves to be useless in properly determining the true long-term value of businesses, and I think it’s high time to do away with them.