When increasing at 40x multiples makes sense – TechCrunch

Webflow’s exciting new round is a great time to discuss the 2022 venture capital valuation dynamics

Webflow, well funded The codeless startup that helps customers build websites, raised a new round of funding this week.

Each Forbes report, Webflow acquired $120 million in new fund at a $4 billion valuation. Forbes also writes that the company will soon hit the $100 million annual recurring revenue (ARR) milestone, has more than 200,000 customers, and currently earns about 8% of its total revenue from corporate clients.

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The above appeared more than a year later Webflow has raised $140 million at a $2.1 billion valuationgiving the company a valuation hit nearly double with its new capital.

But what interests us more than the raw valuation of the company is the revenue multiple that this represents. Why? Because while the nine-figure launch rounds are still being worked on, we’re getting feedback from investors and founders that terms are tightening.

The mass market has even cut software revenue significantly, leading some to worry that late-stage startups will suffer as they return to raising more capital. (Example: this sentiment is echo this morning on CNBC.)

A few days ago we noted that the era of pricing starts at 40 times ARR are fading and more conservative indicators are gaining in popularity. However, with a valuation of $4 billion and an ARR of around $100 million, Webflow is valued at exactly the same number we gave as part of the previous year.

Are 40x ARR multiples still fair game for startups that have reached revenue scale? The answer is that they may be increasingly rare, but Webflow has some things going for it that could potentially make it a high valuation. It’s worth considering Webflow for itself in its diverse context – but perhaps it shouldn’t be assumed that other startups will be able to follow its example this year.

So let’s do it.

Webflow and questions 40x

To understand Webflow’s latest round and the resulting multiple ARRs, we have to do a little bit of historical digging. Taken from our coverage of the company’s previous round and a collection of notes from an interview with Webflow CEO, Vlad Magdalinas follows:

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