Top 2 Reasons You Should Invest in Building a SaaS Startup

We have been witnessing the phenomenal growth of SaaS companies over the past decade or so. Unlike numerous fleeting SaaS startup trends, SaaS companies are increasingly gaining traction and customer attention alike.

According to Wikipedia, SaaS or Software as a Service is a software application delivery and licensing model that is centrally hosted and licensed based on subscription.

SaaS apps are generally, leveraged by web browser users. SaaS has gained phenomenal popularity over the years and has gained the status of a commonly trusted delivery model for several business applications that may include messaging software, office software, DBMS software, payroll-processing software, management software, etc.

Today, SaaS is the most in-demand business model.

Despite their undoubted phenomenal popularity in the business community, SaaS organizations are not visible clearly to the general audience. Even though there are several SaaS unicorns, we have seen that the largest tech giants are generally, consumer-facing marketplaces and platforms.

Let us find out the top reasons why investors are ever so willing to divert their resources to SaaS startup companies.

Easier to Scale

SaaS outfits have all the benefits associated with B2B organizations like service companies and consultancies however, unlike service businesses that can only have linear growth, SaaS ventures can grow exponentially as technology businesses can acquire new customers at a little incremental cost.

While marketplace startups have more advantages than SaaS concepts, they are harder to launch and make a success. According to people in the know, even this does not translate to a huge benefit because, after attaining success, a SaaS business can easily transit to a platform and offer more diversified products to reach a higher plane.

SaaS businesses have clear benefits. For example, setting up and making saas startups operational needs fewer resources, and thus the entry barriers are smaller. A SaaS business can quickly become big with just a few high-value customers and can scale just as easily as, any other tech startup.

Easier to Establish

As pointed out earlier, SaaS businesses have low entry barriers, and they can become profitable with only one good salesperson and developer. According to studies, half the founders of successful and profitable SaaS businesses work part-time.

When you compare it with traditional B2C companies, you will discover they are incredibly resource-intensive. Of course, the absence of steep entry barriers does not mean entrepreneurs can grow a SaaS business, big without effort.

The same study also established a strong correlation between the business revenue growth and the hours of labor put in by the founders. It only points to the fact that it takes fewer resources to establish and operate a SaaS business profitably.

Conclusion on SAAS Startup

The SaaS model is popular because of licensing flexibility, and founders enjoy the liberty to cover different market segments, catering to the requirements of clients looking for fundamental and more specialized SaaS solutions.

SaaS is effective in providing loyal users. Remember that if customers are ready to pay for your product regularly, your startup venture is a success, and is on stable ground. Moreover, the payment model promises consistent predictable income and low upfront expenses. Hence, SaaS can easily attract and convince investors.