If you have been associated with any startup then you would have noticed which industry is the most popular and has most of the limelight to itself. In the past 10 years, the number of Saas Companies or Software as a Service company has grown innumerably. Many mind-blowing startup industries are on a roll. But, we are also very sure that the trend of SaaS startups is here to stay in the coming period too. You will find many startup funds that specialize in SaaS businesses. Also, the smaller startup market funds usually focus on B2-B startups. So, this is one of the reasons why Software as a Service is one of the most preferred startup business models.
Although SaaS companies are growing in numbers and popularity still they are not visible to the common man. How is it possible? There are many SaaS Unicorns out there but the biggest tech giants are the consumer platforms and marketplaces. Keeping all these things in mind, we at Puminati Digital will talk about the benefits of Building A SaaS Startup. You all will also get to know - What are SaaS companies? And What is the reason behind the growth of SaaS startups?
What are SaaS Companies?
Software as a service (SaaS), by the name itself you can make out that it has something to do with services that include software. So, SaaS companies sell and distribute software and applications to the end-users with the help of the internet. The distribution model is such that an independent software vendor (ISV) needs to host the application on the cloud so they will need to contract a third-party cloud provider. But this is not the case with certain big companies like - Microsoft. In this case, the cloud provider is also the software vendor.
If we talk about SaaS, it is among the three main cloud computing categories. The other two are infrastructure as a service (IaaS) and platform as a service (PaaS). SaaS applications are used by IT professionals, business users, and personal users. There are many SaaS products from Netflix and Amazon to other advanced IT tools. One more thing that makes SaaS different from IaaS and PaaS, is that they can be marketed to both B2B and B2C users.
SaaS - Business to Business (B2B) Vs Business to Customers (B2C)
Business to Business (B2B) is preferred by investors in the smaller startup markets because B2C can be riskier. The benefit of a B2B company is that it can grow even with few big customers. In a corporate space, a B2B company can become large enough to invest even with only a few large customers. To put it in easier words, the lifetime value of B2-B customers is much higher.
While what happens with B2C companies is their products or services need to go viral then only it is possible to be safe from the risk of the investment. A founder who has experience in sales and knows the in-depth of the industry can bring his B2B startup to higher levels. But, you cannot be so sure about B2C Companies.
Easier Setup
Just as a good reseller can make a profit from SaaS, a good developer can often build an MVP on their own. In the SOIS report, nearly half of the founders of for-profit SaaS companies that participated in the survey worked part-time for their startups.
Meanwhile, B2C companies often use more resources. That’s not to say it’s easy to make a SaaS business big - in the same survey, a strong correlation was found between founders’ hours worked and the company’s revenue growth. However, this means that SaaS companies use fewer resources to set up and operate.
Scalability
Now you have seen so many advantages of SaaS companies but the same advantages also apply to other businesses like consulting firms or any other service companies. But, here also SaaS startups have a very big advantage. The thing with service companies is that they can only grow linearly. A SaaS is a technology business, in which the cost of adding a new business customer is very less. There is a very high chance of taking the SaaS startup to new heights when we compare it to other businesses. SaaS companies are easier to start with low investment. If one has the right knowledge about the market then it becomes easy to approach other businesses and offer them their services.
Conclusion
So these were the benefits of building a SaaS Startup. To conclude, we at Puminati Digital think the barrier to entry is very small and it needs fewer resources to build a SaaS startup. Also, SaaS companies can become big even with a few customers. Though many B2B SaaS companies are not known by many people they are just as scalable as any other tech startup.
