> If the company is not growing and it's burning more cash than revenue, the company should be valued at (cash in hand + ARR)
Is that really true? Maybe if a company had NO HOPE of growing. Zenefits has clearly shown some huge growth. The market is huge. Just being not profitable and not growing for the short term does not mean you are guaranteed dead... just that you are default dead and need to get working on it, which they seem to be.
Edit - and if truly a company was never going to grow again, I would value them at something like cash on hand + ((total rev - min expenses to stay afloat) * 3) or something... In your example if someone had ARR of 100 million, min expenses to keep doors open of 300 million, and cash on hand of 1 million.. you would value them at 101 million, I would value them at - 599 million.
Is that really true? Maybe if a company had NO HOPE of growing. Zenefits has clearly shown some huge growth. The market is huge. Just being not profitable and not growing for the short term does not mean you are guaranteed dead... just that you are default dead and need to get working on it, which they seem to be.
Edit - and if truly a company was never going to grow again, I would value them at something like cash on hand + ((total rev - min expenses to stay afloat) * 3) or something... In your example if someone had ARR of 100 million, min expenses to keep doors open of 300 million, and cash on hand of 1 million.. you would value them at 101 million, I would value them at - 599 million.