Why Venture Capital Firms Invest in SaaS Management Tools

and where the missing link is for investors

Photo by Charles Forerunner on Unsplash

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.

Photo by Jack Sloop on Unsplash

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…