Valuation Method

DCF Calculator for SaaS Startups

Calculate the present value of your SaaS company using Discounted Cash Flow methodology. Professional financial modeling for Series A+ companies.

What is DCF Valuation?

DCF (Discounted Cash Flow) is a fundamental valuation method that determines your company's value based on the present value of expected future cash flows. It answers the question: "How much are my future earnings worth today?"

For SaaS companies, DCF models recurring revenue streams, operating expenses, growth investments, and capital requirements over a 5-10 year period, then discounts those cash flows to present value using a risk-adjusted discount rate.

Why DCF Matters for SaaS

Intrinsic Value

Calculates actual worth based on cash generation ability, not market sentiment or comparable multiples.

Growth Scenarios

Model different growth trajectories and see how they impact valuation. Essential for strategic planning.

Investor Standard

Widely accepted by VCs and financial institutions. Shows you understand financial fundamentals.

How to Calculate DCF for SaaS

Project Future Cash Flows

Forecast revenue, expenses, and capital needs for 5-10 years. Start with current MRR/ARR, apply growth rates, subtract operating costs and taxes.

Free Cash Flow = EBITDA - Taxes - CapEx - Change in Working Capital

Determine Discount Rate (WACC)

Calculate Weighted Average Cost of Capital. For startups, use 15-30% depending on risk. Higher discount rates for earlier stages and higher uncertainty.

Typical SaaS: Seed 30%, Series A 25%, Series B 20%

Calculate Terminal Value

Estimate value beyond projection period using Perpetuity Growth (2-4%) or Exit Multiple (4-10x ARR). Terminal value typically represents 60-80% of total DCF value.

Terminal Value = Final Year FCF × (1 + g) / (WACC - g)

Discount to Present Value

Apply discount rate to each year's cash flow and terminal value. Sum all present values to get enterprise value. Subtract net debt to get equity value.

PV = FCF₁/(1+r)¹ + FCF₂/(1+r)² + ... + TV/(1+r)ⁿ

When to Use DCF Method

✓ Good For

•Companies with 12+ months operating history
•Predictable recurring revenue (MRR/ARR)
•Positive or near-positive cash flow
•Series A+ funding rounds
•Mature SaaS with stable growth

✗ Not Ideal For

•Pre-revenue startups
•Companies with less than 6 months history
•Highly unpredictable revenue
•Pivot-stage companies
•Very high burn with unclear path to profitability

Frequently Asked Questions

What is DCF valuation method?

DCF (Discounted Cash Flow) is a valuation method that calculates the present value of expected future cash flows. For SaaS companies, it projects subscription revenue, operating expenses, and capital requirements over 5-10 years, then discounts those cash flows back to today's value using a discount rate (typically 15-30% for startups).

When should I use DCF for my SaaS startup?

Use DCF when your SaaS has: 1) At least 12 months of operating history, 2) Predictable recurring revenue (MRR/ARR), 3) Positive or near-positive cash flow, 4) Clear path to profitability. DCF works best for Series A+ companies. For pre-revenue startups, consider Berkus or Scorecard methods instead.

What discount rate should I use for SaaS DCF?

SaaS discount rates typically range from 15-30% depending on stage and risk. Pre-seed: 30-40%, Seed: 25-35%, Series A: 20-30%, Series B+: 15-25%. Higher discount rates reflect higher risk. Consider factors like: revenue stability, market competition, team experience, and burn rate.

How accurate is DCF for early-stage SaaS?

DCF accuracy improves with business maturity. For companies with <2 years history, DCF has high uncertainty due to limited data. Combine DCF with other methods (Revenue Multiple, Comparables) for better estimates. DCF is most accurate for companies with consistent revenue growth, stable margins, and clear unit economics.

What is terminal value in DCF?

Terminal value represents your company's value beyond the projection period (typically year 5+). Two methods: 1) Perpetuity Growth: assumes constant growth rate forever (2-4% for mature SaaS), 2) Exit Multiple: applies ARR multiple to final year revenue (4-10x depending on growth/margins). Terminal value often represents 60-80% of total DCF valuation.

Learn More

→ Complete Guide to DCF Valuation for Startups → SaaS Startup Valuation Guide 2025 → Valuation FAQ

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