---
title: ""
date: 2026-04-26
lastmod: 2026-07-31
canonical_url: https://www.tomtunguz.com/formula-for-startup-2022/
author: "Tomasz Tunguz"
---


A reader asked for an update given the macro changes & the stock market behavior. Here it is:

` Multiple = -12.6 + 34.1 x Forward_Growth_Rate + 4.2 x Sales_Efficiency `

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Some quick definitions:
- Multiple is the forward revenue multiple. Take it and multiply your company's planned revenue (not ARR) next year & you'll have an estimate of the value of your business if it were traded in the public markets today.
- Forward_growth_rate: how much the business will grow revenues in the next 12 months
- Sales_Efficiency: (change in gross profit) / sales_and_marketing expense. In other words, how much marginal gross profit did the sales & marketing investment last period generate. This can be calculated quarterly or annually. 
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