Annual Recurring Revenue (ARR)

Definition

ARR is the annualized value of a company’s recurring subscription revenue, excluding one-time fees and services. It is the headline metric for SaaS fundraising.

How it comes up in fundraising

Investors benchmark rounds on ARR: in 2026, US Series A investors typically look for $1M to $2M ARR growing 2x to 3x year over year.

Frequently asked questions

How is ARR different from revenue?

ARR counts only recurring, contracted revenue annualized; total revenue can include one-time services, hardware, or usage spikes that do not repeat.

How do investors verify ARR?

In diligence they rebuild it from invoices and contracts, so keep your definition clean: no one-time fees, no double-counted pilots.

Round Funded resources

Cite this term

Round Funded. "Annual Recurring Revenue (ARR)." Startup Fundraising Glossary.

Stable URL, it will not change: https://www.roundfunded.com/en/glossary/annual-recurring-revenue-arr

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