Revenue Multiple
Revenue Multiple, expressed as TEV (Total Enterprise Value) divided by TTM (Trailing Twelve Months) Revenue, is a valuation metric crucial for assessing the worth of a company, especially when it's yet to turn a profit.
What it Means:
The Revenue Multiple provides Indian founders with insight into how the market evaluates a company's ability to generate revenue. An increased multiple frequently indicates investor optimism regarding future earnings.
How to Calculate:
Revenue Multiple = TEV / TTM Revenue is the straightforward formula. Indian founders can calculate this by taking the enterprise value of the company and dividing it by the revenue generated in the previous 12 months.
Why Measure:
Assessing Revenue Multiple is essential since it provides information about a startup's potential for expansion. It helps Indian entrepreneurs draw in investors, strike good deals, and measure their performance against industry norms.
Examples:
Think about an Indian tech startup that has a TTM revenue of ₹10 crore and an enterprise value of ₹50 crore. The Revenue Multiple would be 5 (₹50 crore / ₹10 crore).
Understanding Revenue Multiple helps Indian founders navigate the valuation landscape and strategically position their startups to attract investors and grow the thriving Indian entrepreneurial ecosystem.