9 years ago

Funding for SaaS businesses records an impressive 70% growth YoY

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This exciting trend in Software as a Service offers an excellent opportunity for entrepreneurs to explore its many benefits.

As the technology industry continues to evolve, many business areas continue to thrive. One industry that is currently experiencing an impressive growth is Software as a Service (SaaS). Funding for SaaS companies hit $11.7 billion in 2014, up by 70 percent year over year, according to Tibco Analytics’ SaaS Trends Report.

The report examines financing and exit trends across the United States. It covers venture capitalists (VCs), top investors, exits, and deals across the SaaS area.

The improving trend of VC-backed SaaS businesses is very encouraging. The success stories of Workday and ServiceNow highly contributed to the overwhelming achievement of SaaS investment, which has almost tripled since 2011.

Here are some impressive investment figures made by several companies last year, as listed in the report.

  • Dropbox received $350 million in extra funding, making it the largest deal last year.
  • SurveyMonkey raised $250 million.
  • Online publishing and development specialist Automattic is third with $160 million.
  • Cloud storage company Box and security provider Lookout each received $150 million.

SaaS investments by industry

Between 2011 and 2014, most funding for SaaS businesses went to Business Intelligence (BI) and Analytics and Performance Management, with 838 deals totaling $6.6 million. Customer Relationship Management (CRM) with 403 deals followed, and then Advertising, Sales and Marketing with 403 deals. CRM and Advertising have an investment of over $2 million each.

Monitoring and Security comes next with only 226 deals but with over $2 million of investment. Another area that made it to the top 5 list is HR and Workforce Management with 191 deals.

VC-backed SaaS company exits

The report on the number of companies exiting venture capital funding shows an interesting revelation.

The top 10 SaaS businesses that exited over the past four years were mainly IPOs. Workday was on top of the list with $4.49 billion valuation. It was followed by Veeva Systems with $4.40 billion valuation. The other companies that made it to the largest SaaS exits are LinkedIn with $2.60 billion, FireEye with $2.32 billion and ServiceNow with $2.16 billion valuations.

The number of total exits in 2014 was up by 66 percent year-on-year. In 2014, the highest number of SaaS IPOs over the last four years was recorded. The list included companies such as New Relic, Hubspot and Zendesk.

Remarkably, 49 percent of the SaaS companies raised less than $10 million before exiting VC funding.

With the rapid growth of SaaS market, the vendor that recorded the highest number of acquisitions is Oracle. The company reported approximately $700 million worth of acquisitions between 2011 and 2014.

This exciting trend in Software as a Service offers an excellent opportunity for entrepreneurs to explore its many benefits, especially with its flexible pricing model and funding options.

Contact Four Cornerstone now if you want to learn more about Oracle SaaS and why is it now becoming the hottest trend. Our Oracle Consulting in Dallas Fort Worth is always available to share their expertise. We also offer Oracle Database as a Service solution.

Photo courtesy of Marco Verch.

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