and where the missing link is for investors
Over the last few years, SaaS has become a very profitable investment for venture capital firms. In 2019, $136.5B was invested in SaaS companies in the US alone. More and more SaaS companies have entered the market, disrupting current practices and helping customers streamline their businesses and eliminate manual processes.
First, SaaS businesses provide predictable, recurring revenue, a draw for any VC firm. The SaaS model also allows startups to grow their customer base for the same costs, more or less. In this way, SaaS startups are incredibly capital efficient.
Secondly, SaaS companies are easily scaleable. One study found that SaaS companies provided the most scaleups compared to all other sectors.
Amid the unpredictability and volatility of the COVID pandemic, SaaS companies have continued to thrive. One analyst described that “In many ways, 2020 has been the best year yet for SaaS — the very
business model of SaaS lends itself well to uncertainty. Its flexibility has led to more IPOs, more revenue, and more interest in SaaS than ever.” In a post from the Forbes Communications Council, SaaS revenue in 2024 is projected to climb to $233 billion by 2022 and $369.4 billion by 2024. Spurred by the pandemic, scalable SaaS management tools that improve cost and time efficiency for businesses are in demand.
However, even with all of the VC investments in SaaS management tools, there are very few tools for investors themselves.
Investors are left behind to cobble together various tools to fit their needs. Airtable does an ok job, but investors still need to reconcile with little automation. Zapier is a great tool to help connect the pieces, but no-code software only goes so far. CRMs like Affinity do a good job at scratching the surface but leave investors frustrated and only work if you have a larger internal team. For most seed funds and sub-$100 million funds, the cost to run a Pitchbook plus Tableau product is way too expensive for the 2% operating fees the fund charges.