When speaking with entrepreneurs and investors about the investment required to start up a new Software-as-a-Service company, I often refer back to this list. At Montclare thought this would be a handy reference for those looking to start a SaaS company during 2010.
Looks like you might need a money tree to start a SaaS company, but for those that reach critical mass and go public, there is a tremendous payback. This is information has been gathered from various sources including Wachovia, CrunchBase and Google Finance.
| Company | Investment | Current Market Cap | Ticker Symbol |
| (in 000′s) | (in 000′s) | ||
| Blackboard | $100.7M | $1,300M | BBBB |
| Concur | $30.2M | $2,100M | CNQR |
| Constant Contact | $37.3M | $527M | CTCT |
| DealerTrack | $48.0M | $774M | TRAK |
| Kenexa | $54.5M | $256M | KNXA |
| LivePerson | $41.6M | $335M | LPSN |
| LogMeIn | $20.0M | $448M | LOGM |
| NetSuite | $84.9M | $1,000M | N |
| RightNow | $32.2M | $553M | RNOW |
| Salary.com | $5.7M | $40M | SLRY |
| Salesforce.com | $64.5M | $8,500M | CRM |
| SuccessFactors | $54.5M | $1,100M | SFSF |
| Taleo | $36.9M | $891M | TLEO |
| Ultimate Software | $25.1M | $755M | ULTI |
| Vocus | $26.4M | $345M | VOCS |
Some of the companies mentioned above started out with non-cloud products. (Concur a good example.) So the investment is a bit deceiving.
Also, if you take a page from Marc’s book, the really interesting number would be sales and marketing. Probably correlates better with overall market cap, that is, the more you spend on it, the higher the cap.
Btw, I think you mean Constant Contact.
David,
Good catch on the Constant Contact.
I agree that the market cap is often a bi-product of the amount of sales and marketing spend that the company uses to launch and grow their distribution channels.
Your other comment is very relevant, because transitioning from an on-premise model is quite difficult. Several of these firms are still operating a bit of a hybrid model, some with significant legacy portfolios.
We are the at the beginning of a 10-year shift to SaaS and Cloud Computing so I will continue to update this information over the course of 2010.
Thanks for your comment!
Kevin
This list also fails to take into consideration acquisitions and the cost to build those acquired companies prior to the acquisition. LPSN is a good example there as they have grown through several large transactions (relative to the $41.6MM investment noted above) such as HumanClick, Proficient and Kasamba.
Interesting data Kevin. One thing implicit here that jumps out at me is that 7 of 15 of these companies are in Talent Management, Performance Management, Human Capital Management, and/or Learning Management.
A couple possible thoughts on why at:
http://velocitymg.com/explorations/leveraging-learning/why-are-talent-performance-learning-dominating-the-cloud/
Would love to hear you thoughts on why such a concentration in that direction.
Jim you are right that m&a is increasingly important as companies are not only considering entering the SaaS market, net new but also as a way to begin or accelerate their transition to SaaS. Taleo and Kenexa are both firms that have used this approach.
Good comment.
John I think that HCM/Talent Management buyers were early adopters of SaaS because of HR’s need to reduce costs but still deliver high levels of service. SaaS adoption seems to be more rapid in market segments that have applications that service highly connected end users, CRM being another example. I also think that adoption of a lot of ‘bolt-on’ self service applications in the late 90′s to core systems like PeopleSoft seemed to make SaaS apps a natural transition for HCM/Talent Management systems.
Kevin –
Really intriguing set of data; might be interesting to add a couple of columns for “Year Founded,” “IPO date,” and “Money raised via IPO.”
The first two would give the chart some context in terms of recency and longevity; the third might reveal some pattern about “big exits.” (See this piece over at GigaOm: http://snipr.com/om0201 – Let’s Create a New Tech Startup Myth)
j.
Managaing Editor, CRM magazine
@kitson on Twitter
Josh,
I agree that this would be interesting for the readers. I will provide an updated table later this week.
Thanks for your idea!
Kevin
One thing implicit here that jumps out at me is that 7 of 15 of these companies are in Talent Management. PeopleSoft seemed to make SaaS apps a natural transition for HCM/Talent Management systems
Frank,
Valid observation.
In my opinion SaaS really got an early start in HR, because it was a process area that was under a lot of pressure to provide less expensive, yet functional software solutions. HCM customers were also very likely to have developed homegrown talent management solutions using Microsoft Excel and Word, which required a lot of administration and usually contained many errors. SaaS solutions offered a really attractive alternative, and that is why many of the current publicly traded SaaS firms are offering these types of products.
Kevin
this really needs a huge amount to form such kind of company
a huge amount is required for the formation of such type of companies
Get connected
Email Subscribe
Archives
Categories
Blogroll
Twitter
© 2008-2013 Montclare
Made by Jet Peppers