Why use SaaS (and fund it too)?

It has been already established that SaaS is used by millions of users, it has become easier to implement and use, and companies can start using it right away without having to wait for it to be developed. SaaS is the clear choice for most businesses today. It is affordable, easier to use, and more flexible. Saas has made software more profitable and prestigious than it ever used to be.

But more importantly, it has added a startup vibe to the softwares. Unlike Oracle and SAP days, an app that we use today is not just a software but it is a story. A story of its becoming. How it came into existence, who are the founders, how much did they struggle to find its first user and so on.

I recently read somewhere on Linkedin that the era of saas may be coming to an end. India saw an 80% drop in SaaS funding in the first 6 months of 2023. This is rather drastic given that it was already low compared with the US. SaaS VC success stories are very common in the USA, but Indian VC stories have been more around ecommerce and deliveries. In fact, Saas’ story is yet to emerge. Product management is an emerging paradigm here. Some of the best talent is finding out more and how to go about it. They are learning from the nitty gritties of the successes elsewhere and how seriously they invest in product development. It will all play out in the next few years hopefully.

Here are some examples of SaaS companies that have been successful:

• HubSpot: HubSpot is a CRM and marketing automation platform that helps businesses grow. Well, we already know that. HubSpot’s expenses for product development in 2021 was $0.5 billion.
• Slack: Slack is a communication platform that helps teams collaborate and communicate more effectively. Slack’s expenses for product development in 2021 was $1.8 B (as per bard).
• Zoom: Zoom is a video conferencing platform that allows businesses to connect with customers and employees remotely. Zoom’s expenses for product development in 2022 was $0.7 billion.

The investment has been increasing, even doubling in few cases every year. These are just a few examples, saas companies spend a significant amount of their expenses on product development. They also offer bundled subscriptions or tiered plans to allow users to choose as per their requirement. This allows businesses to get the right level of service and support for their needs. There is no way another model can beat this shared economy and clear accountability model, at least in near future.