Introducing Valuations.cloud
Valuations.cloud is a website dedicated to providing investors with tools to help determine whether a growing tech company is an attractive investment. The articles and data on this site are based on the principles of value investing and proven valuation models for growing tech companies. Read More
Rule of 40
The Rule of 40 is a simple formula that helps investors determine whether a SaaS company is growing efficiently. The Rule of 40 states that a SaaS company's revenue growth rate plus its profit margin (our model uses FCF margin) should be at least 40.
Rule of X
Similar to the Rule of 40, the Rule of X is a metric used to evaluate a company based on growth and profitability. With the Rule of X, however, more weight is placed on growth. Growth and margin can be used together to give an indication of a firm's performance.
SaaS/Cloud Valuations
This simple model helps investors determine whether a SaaS company is overvalued or undervalued. The model combines a multiple of sales and revenue growth to determine which companies are most attractive from a valuation standpoint.
BVP Nasdaq Emerging Cloud Index (EMCLOUD)
The main focus of Valuations.cloud is on companies within the EMCLOUD index.
The BVP Nasdaq Emerging Cloud Index is designed to track the performance of public companies that are primarily involved in providing cloud software and services to their customers.
Here's a breakdown of its purpose and significance:
- Focus on Cloud Computing: focusing on companies that are leaders in the cloud computing space
- Growth Companies: feature companies that are in the earlier stages of growth compared to those included in broader tech indexes
- Benchmarking Performance: index serves as a benchmark for investors interested in the cloud computing industry
Overall, the index provides a useful tool for both understanding and investing in the emerging cloud computing market, highlighting companies that are at the forefront of technological advancements and market shifts within the cloud domain.
Bessemer Venture Partners (BVP) provides a great chart of the performance of the EMCLOUD index since its inception. Included is a comparison of the performance of the broad indexes (Dow, S&P, NASDAQ).