Webflow’s fascinating new round is a good time to discuss the dynamics of venture capital appreciation in 2022
Webflow, a well-funded no-code startup that helps clients build websites has raised another round of capital this week.
According to Forbes reporting, Webflow has brought in $120 million in new funds at a valuation of $4 billion. Forbes also writes that the company will soon reach $100 million in annual recurring revenue (ARR), has more than 200,000 customers and currently earns about 8% of its total revenue from corporate customers.
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The above comes just over a year after Webflow raised $140 million at a valuation of $2.1 billion, giving the company a valuation increase of approximately 2x with its new capital.
But what we care about more than the rough valuation of the company is the multiples of revenue that the figure represents. Why? Because while the nine-figure startup rounds are still being finalized, we’re hearing from investors and founders alike that conditions are tightening.
In fact, the public market has drastically reduced the value of software revenue, leading to some concern that late-stage startups will suffer if they go back to raise more capital. (For example, this sentiment was reflected in CNBC this morning.)
A few days ago, we noticed that the era of startup valuations at 40x ARR was fading and more conservative metrics were becoming common. However, with a valuation of $4 billion and an ARR of about $100 million, Webflow is valued at exactly the number we consider a concoction of yesteryear.
Are 40x ARR multiples still fair game for startups that have hit the revenue scale? The answer is that they may be getting rarer, but Webflow has a few things that will likely earn it a valuation premium. It’s worth weighing Webflow itself in the context of its rich multiplicity – but we may not assume that other startups will be able to follow suit this year.
So let’s do that.
Webflow and the 40x question
To understand the latest round of Webflow and the resulting ARR multiple, we need to do a little historical digging. Based on our coverage of the company’s previous round and a series of notes from an interview with Webflow CEO Vlad Magdalin, the following: