Happy New Year!

In February Montclair Advisors launched our SaaS Business Profile Series and have been focused on covering as many SaaS companies as possible during 2009. As it turns out we were able to profile more than 30 SaaS companies of all types including pure SaaS firms, Cross-Overs and Hybrids!

We would like to thank all of the executives and companies that participated during 2009 and we look forward to continuing to follow their progress during 2010.

What we learned from these thirty-four profiles:

• SaaS is an evolving business model - It is still a new concept and few firms are running a pure subscription software models. Beware that there is still a lot of “Fake SaaS” out in the market overall.
• There are many variations of SaaS - these variations are based on the company’s starting point, the market they serve and the types of products they sell. Interestingly, Salesforce.com is actually not a very representative SaaS business model for the broader market.
• It takes time to build a real SaaS company - For many SaaS firms it takes up to 7 years to reach breakeven and nearly 10 years to ultimately gain scale with their business model.
• Cross-over providers will still need to hold onto their on-premise legacy for the foreseeable future, because it is hard to switch customers to SaaS all at once.  It is also difficult to upset your maintenance revenue streams, especially during tough economic times.
• The Great Recession has permanently changed the Software buyer’s behavior towards SaaS due to the lack of available capital. When you see SAP and Oracle and many of these profiled ISV’s moving their businesses to SaaS, you know it isn’t a fad.
• Penetrate and Radiate. The successful SaaS firms have started small, with easy to sell, easy to consume solutions.  They then develop additional software, services and content solutions to sell back into their installed base.

Here is an overview of the thirty-four companies Montclair Advisors covered in 2009:

Profiles by SaaS Category

Pure SaaS:        15     Started out and only offer SaaS subscription services

Cross-Overs:    11      Started out as on-premise, but have fully transitioned to SaaS

Hybrids:             8      Continue to offer SaaS services AND on-premise software

Public vs. Private

Public:               6

Private:             28

Profiles by Age of Company

0-5 Years:         9

5-8 Years:        10

8+ Years:         15

M&A by Companies

Sell-side:            2    Mint.com by Intuit for $170M and QuickArrow by NetSuite for $20M

Buy-side:           4    Lithium Technologies (Keibi Technologies), RightNow (HiveLive), Taleo

(Worldwide Comp), Xactly (Centive)

Fundraising Public & Private

What was also interesting to see is that even in the toughest economic climate since the Dot Com meltdown, that many firms that were profiled were able to raise capital in both the private and public market places.   The big winners were SuccessFactors who raised more than $200M in a public offering and Workday, raised an impressive $75M private round that was led by New Enterprise Associates.  As the economy begins to turn in 2010, expect to see more SaaS firms going back out to raise growth capital.

We hope these profiles have been helpful to our readers and we will continue to profile interesting SaaS firms in 2010, because we learn a lot about our emerging industry and we will continue to build back into the Montclair Advisors advisory services that help our clients become successful SaaS companies.

Please let us know what you think, because we would welcome any ideas on how to improve the Saas Business Profile Series for 2010.  Just drop me an email at kevin@montclairadvisors.com.

Company: InsideView
Started: 2005
Located: San Francisco, California
Geography: North America
Market: Sales 2.0
Products: SalesView

Key Customers: Ariba, Borland, IBM, Omniture, Serena Software, SuccessFactors and Synq.

Website: InsideView

Blog: InsideView Blog

Recent News:

NETSUITE’S SUITECLOUD ENABLES INTEGRATION OF INSIDEVIEW’S SALESVIEW WITH NETSUITE CONNECTING SALES INTELLIGENCE TO NETSUITE CLOUD

INSIDEVIEW NAMED TO JMP SECURITIES’ HOT 100: BEST PRIVATELY HELD SOFTWARE COMPANIES LIST

INSIDEVIEW HARNESSES TWITTER TO POWER SALES

I asked Umberto Milletti, InsideView’s Chief Executive Officer a few questions about his business and his view of the SaaS market in 2009.

Did you start out as a Software-as-a-Service company?

Yes. Since the most complete and valuable business intelligence is available in the cloud, SaaS delivery has been built into our business model from day one. Also, since SaaS has become the delivery model of choice to our target audience – sales and marketing professionals - it was essential that we bring them the intelligence they need in their preferred model.

Why do your customers buy from InsideView?

Our customers come to us because they need to improve sales productivity and accelerate deal velocity. SalesView delivers just that: It maximizes sales team productivity by delivering a one-stop shop for prospecting needs and accelerates the sales cycle by enabling sales people to call the right prospects at the right time. And it does so by aggregating intelligence from thousands of sources, both traditional and social, to ensure accuracy, timeliness, and mostly importantly, relevance.

While having an efficient sales and marketing engine has always been essential, the economic downturn has pushed the need to “do more with less” to priority #1 for most sales organizations.  That’s a big reason for the success we’ve enjoyed in the last two+ quarters – the brutal economic environment has actually accelerated the need for and adoption of Sales 2.0 technologies like SalesView.

What do you see as the key trend emerging in the SaaS industry?

With Cloud computing platforms becoming more mature, it’s becoming easier and easier to develop SaaS applications. That’s good news for customers, since as choices multiply, prices diminish. And with the base infrastructure in place, customers can focus on sales and marketing productivity applications, like ours, that sit on top of the Cloud and deliver relevant intelligence to the employee, at the right time and place.

SaaS and Cloud computing are allowing Enterprises to give their employees the same quality of applications and information that have become the norm for Internet users/consumers. Enterprise 2.0/3.0 is happening.

What is your outlook for 2009?

The tight economic environment will continue to force companies to focus on their core assets and competencies. Usually that means revenue generation and IP development. Anything that is not directly contributing to revenue or core company competencies is going to be under great budget pressure. Anything that drives efficiencies in revenue generation or IP development is going to get a lot of attention (we saw this earlier this decade with the explosion of technologies like web conferencing and SaaS).

Thank you to Umberto Milletti, Marc Perramond, Rand Schulman and Raksha Varma for contributing to this profile.