Growth versus the floor.

Your company is worth two things added together: what the customers you already have will pay you if you stopped selling tomorrow, and what your growth adds after it pays for itself. Put in your own numbers and see both, at today's price of money.

Every figure is a discounted cash flow, shown as enterprise value ÷ current recurring revenue. Answers the founder question What is my software company worth?

Price of money

Discount rate = 10-year Treasury + beta × equity risk premium + private-company premium. Set to 5.2%, the 10-year in late September 2026.

10-year Treasury5.2% Equity risk premium5.00% Beta1.20 Private-company premium3.00%

Retention: the floor

Your installed base with no new customers. Net revenue retention starts here and settles toward a mature level as expansion saturates.

NRR today110% Mature NRR102% NRR half-life, years4.0 Harvest cash-flow margin30%

Free cash flow margin with no new-customer sales spend. We see 45–50% sustained where gross retention is near 95% and gross margin near 80%.

Growth Current growth35% Acceleration, points per year0 Years of acceleration0 Growth half-life, years3.0 Terminal growth3.00% Sales efficiency, S&M ÷ new ARR1.20×

Stability of growth

Yearly shocks around plan. Spend is committed to plan, so a missed year costs revenue without saving sales spend.

Growth volatility, points8 Shock persistence0.50 Rate premium per 10 points of volatility1.00 pts

What buyers pay

Our published base case for $15–20M vertical software is 4.0× revenue, and 5.5–5.8× with genuine vertical focus.

Reference range, low4.0× Reference range, high5.8×

The value bridge

Floor plus growth premium equals what it is worth.

3.4×Floor, no new customers

1.6×Growth premium

4.9×Intrinsic value ÷ revenue

0×1×2×3×4×5×6×7×8×

Floor Growth premium Range buyers pay

Intrinsic value of 4.9× lands inside the 4.0–5.8× range buyers pay, and the floor alone covers 84% of the low end. The price holds if the growth plan does.

14.2%Discount rate

36Rule of 40, year one

68%Share of value from the floor

4.5×Risk-adjusted median

2.9–6.8×10th–90th percentile

52%Value beyond year ten

Trajectory

The shape of growth is worth as much as the level

Same company, same economics, three shapes of growth curve. Shaded band is the range buyers pay.

Ten-year path

Revenue and cash-flow margin, growth case against the floor

Revenue indexed to today = 1. Growth costs margin while new customers are being bought.

Interest rates

What the floor is worth as rates move

Floor value across the 10-year yield for four levels of starting NRR, everything else as set.

Stability

Unpredictable growth lowers the median

600 simulated paths of your growth case. Wider variance widens the tails and pulls the middle down, even with the same plan.

Your levers

Which of these can you actually move?

Change in value from one move, everything else held.

Move	Floor	Total	Change
+5 pts current growth	3.4×	5.4×	+0.42×
+1 year growth half-life	3.4×	5.6×	+0.64×
+3 pts a year acceleration for 2 years	3.4×	7.4×	+2.43×
+5 pts NRR today	4.0×	5.3×	+0.37×
+2 years NRR half-life	3.5×	5.1×	+0.12×
Sales efficiency 0.25× better	3.4×	5.2×	+0.26×
+5 pts harvest margin	3.9×	6.0×	+1.03×
10-year yield +100 bp	3.1×	4.4×	−0.53×
Private-company premium −200 bp	4.1×	6.4×	+1.44×

How the model works

Two numbers, priced the same way.

The floor

Your current customers with no new-customer spend. Revenue grows at NRR − 1 each year, with NRR settling from today's level toward a mature level on the half-life you choose. Cash flow is revenue times the harvest margin. Ten explicit years, then a terminal value growing at mature NRR − 1, held at least two points below the discount rate.

Why NRR has to settle

No book of customers expands forever. Seats fill, modules get bought and price increases run out. Held flat at 110%, NRR alone would more than double the floor, to about 8× at today's rates. The floor is only as good as the persistence of your retention, which is why the half-life matters more than the headline.

The growth premium

Growth follows the path you set: optional acceleration, then an exponential fade toward terminal growth. It never falls below what NRR supplies. Growth above that has to be bought, and each point costs sales-efficiency points of margin. When efficiency is poor enough, the premium turns negative: buying growth lowers what the company is worth.

Stability

Each simulated year adds a growth shock with the volatility and persistence you set, against sales spend committed to plan. The discount rate also rises with volatility, because buyers ask a higher return for growth they cannot predict.

What it leaves out

Taxes, working capital, debt, dilution and deal terms. It is an intrinsic lens to set against what a specific buyer will pay, not a replacement for comparable transactions.

Mistakes founders make here

Mistake 74: Banking on exponential forcesA plan that assumes today's growth holds is valuing a curve that fades. Mistake 130: Expecting a customer to expand without sellingThe floor rests on expansion someone has to earn. Mistake 158: Scaling a broken systemPast a certain sales efficiency, more growth lowers the value.

Plays we would run

ARR ScheduleCohort NRR and gross retention, the inputs that set your floor. Sales Efficiency RatioThe number that decides whether growth adds value or subtracts it. Unit EconomicsProves the revenue you buy outlives what it cost. Meaningful Exit PlanNames the buyer and what that buyer underwrites.

Know your number too

Value is what the company is worth. Enough is what you need.

The Meaningful Exit framework works out the second number, then maps you to the buyer and structure that fit it.

Define your meaningful exit

An illustrative model for discussion. Outputs depend entirely on the assumptions entered and are not investment advice or an offer of any security.