The numbers are in, and if you’re in the SaaS business, they look pretty encouraging…

Let’s cut to the chase – the last 18 months have altered the fundamentals of society, and by extension, the business landscape and the markets it feeds. The good news for SaaS companies, both established and aspiring, is that many of the changes we’ve seen in this period are being baked in to the fabric of society, and for the most part, they’re changes that play into the hands of online services.

“The coronavirus pandemic has caused major shifts in the way we live and work. It’s the perfect opportunity for entrepreneurs to rip up the rule book and use tech to rethink how we can make our post-coronavirus world more inclusive.“

Charlotte Bax, Captur founder

A look at the data

A quick review of industry surveys for 2020 show that UK tech is pulling ahead faster than ever:

  • UK tech industry boasted 80 ‘unicorn‘ companies in 2020, more than any other country in Europe [Source]
  • SaaS companies in the UK gained £15bn investment in 2020, more than France and Germany combined [Source]
  • UK gov involved in over 1/3rd of UK start-up deals in 2020 under ‘The Future Fund’ [Source]
  • Equity investment in small businesses hit a record £9bn in 2020 – and shows no signs of slowing down. [Source]
  • Q1 2021 saw record investment for tech start-ups, reaching a total of £6bn[Source]

This shows that the tech startup industry is alive and well, as well as having the backing of the Treasury, which is taking an unabashed ‘tech first’ approach to developing the national economy and looks to be consolidating its lead on the rest of Europe with a hefty investment support. With the government investing in 1/3rd of UK start-ups in 2020 as part of the Future Fund, it’s clear that the government sees tech as a key avenue in economic planning.

But what does this mean for the aspiring SaaS founder who has only just taken to the drawing board? Should you rush to get your MVP on the market? Is there a risk of missing out on the action by delaying? Well, no. The fact that 2021 has seen tech investment continue to rise means that capital is feeling confident that the pandemic has accelerated an existing trend, rather than creating just another fad. It does mean that the marketplace is looking increasingly competitive with so many options for VC’s to chose to invest in. That said, you shouldn’t be planning for early investment unless you think you’ll need it to get off the ground – start within your means, and you’ll be more likely to succeed on your own terms.

What can we learn from the past year?

Why did start-ups fail in 2020?

CBInsights recently published their findings on why start-ups failed in 2020. You can read their report in full here, but we’ve picked out some highlights that we think resonate with what we’ve seen happen in the SaaS market here at Angle.

42% of startup businesses fail because there’s no market need for their services or products.

This is the reason given by the largest segment of respondents – and goes to prove the huge importance of idea validation. Whilst you’ll never know for sure until your product is on the market, there are calculated steps worth taking to gauge whether there is an appetite for your SaaS offering before you sink countless hours and your life savings into a doomed project.

29% failed because they ran out of cash.

A brutal reality for any start-up, managing cashflow to ensure the sustainability of your business model can often be lost to over-ambitious builds and poorly-scoped projects.

19% were outcompeted.

Bearing in mind that these are self-reporting statistics, it’s nevertheless interesting to see this figure come in relatively low. This is no doubt a particularly thorny issue for SaaS products – in such a volatile and disruptive environment, it’s easy to get knocked off your perch, especially if your initial success takes you by surprise and leaves you running to catch up with your consumer base. This is where it pays to research the market you’re targeting, and understanding your competition as well as the audience you’re competing for.

What’s next for SaaS?

As work-from-home seems to be setting in as a new normal for a growing number of business, SaaS solutions are going to become increasingly sought after – which mean that they’ll be ever-more opportunities to outperform, undercut, and unseat competitors. But it won’t just be the world of work generating increased demands. Changes in consumption, leisure, travel and more will open new avenues for exploitation.

An analysis by Forbes predicts that the SaaS market will grow from $171bn in 2020 to $200bn by the end of this year, reaching $369.4bn by 2024.

SaaS is also set to be enhanced by advancements in AI – still a relatively new technology, it is nevertheless seeing adoption by household names including HubSpot, GitHub, Grammarly and Slack.

Whilst the biggest SaaS success stories are services that cater to large audiences, ‘Micro-SaaS’ (applications that cater to niche demands in specific industries) is becoming increasingly viable as development becomes cheaper and more accessible, making bespoke solutions for smaller markets more viable.

All told, there’s never been a more exciting time to be in the SaaS market – opportunities abound, and there is a huge array of resources to draw from to help get you set up. If you think you’re sitting on the next unicorn IPO, but haven’t got the know-how to get it off the ground, consider making use of our Idea-to-Launch program, or just book in a quick chat with our experienced team to get the ball rolling…

We can help with your SaaS startup or product. Let’s talk!