The SaaS industry is anticipated to reach a staggering $436.9 billion valuation by 2025, with a CAGR of 12.5 percent. With this in mind, it’s no surprise to learn that SaaS solutions are among the fastest-growing segments across the entire IT industry, and it’s easy to see why.
Software as a service (SaaS) companies typically operate on a subscription basis and are centrally located on a remote cloud network. These features allow companies to develop solutions that combine simplicity, accessibility, and affordability so that businesses of all shapes and sizes can easily access complex software and IT infrastructure components without breaking the bank.
Why are there so many SaaS unicorns?
We are beginning to see more and more SaaS startups attain the coveted “unicorn” status, which means they have reached a valuation of over $1 billion, joining the likes of Stripe, Zendesk, Papaya Global, and Salesforce.
Interestingly, the term unicorn was coined to imply the rarity of a startup reaching such a lofty valuation. However, we are currently producing unicorns faster than ever before. Moreover, SaaS companies are well and truly leading the trend, as more than a third of all unicorns belong to this category (352 and counting). So, what is the reason for this?
Well, there are several factors at play. Foremost, the demand for SaaS products has gone through the roof as companies look to reduce costs and improve their operations with cloud-based solutions. On top of this, SaaS solutions are fully scalable. This means that companies do not have to invest heavily into additional infrastructure when they want to ramp up operations, which is especially beneficial for those operating in time-critical industries.
Finally, SaaS multiples are at an all-time high (currently at an average of 13x annual revenue). This means that a fast-growing company can be worth $1B much earlier than a few years ago. On that note, let’s take a look at three high-performing SaaS companies that look set to join the unicorn honors list in the not too distant future.
Symmetrical.ai
The United Kingdom is Europe’s SaaS startup hotspot, garnering more venture capital funding in 2021 than the following two nations combined. Moreover, London accounted for more than half of that funding and was, in fact, the recipient of 16% of the entire European tech investments. One of the companies leading the charge in the capital is symmetrical.ai, which is a payroll provider that aims to overcome many of the long-standing issues associated with payroll processes.
Using their SaaS solution, companies are able to onboard new talent at scale while running their payroll invisibly. This means no more reliance on over-complicated Excel spreadsheets, which are extremely susceptible to human error. As such, the companies that rely on these outdated solutions typically encounter delays and miscalculations, which can cost them valuable time and resources when remediating.
In contrast, symmetrical.ai aims to support rapidly growing organisations as they scale up their operations by facilitating speedier onboarding, minimizing onboarding churn, and offering error-free payroll that is ready to payout (real-time, daily, weekly, and monthly). Their ultimate objective is to eliminate employment boundaries, time restraints on getting paid, and the overall complexity of payroll. They secured an additional $18.5 million in April 2022, which should allow them to grow their operations and move closer to that billion-dollar valuation.
Walnut
After growing 700% in annual recurring revenue, it seems that Walnut is well on its way to achieving unicorn status. Following on from a $15 million Series A and $35 million Series B funding round, the Tel Aviv-based company looks in great shape to keep scaling its operations and opening its services into new markets. Walnut is a no-code, sales experience platform designed to help B2B companies optimize their sales efforts with highly personalized sales demos that convert.
Walnut’s groundbreaking Sales Experience Platform is redefining the B2B sales industry by restoring full power to sellers and reducing reliance on back-end teams such as graphic design and IT. As a result, customer-facing salespeople can spend more time personalizing sales pitches to each client’s wants, needs, and pain points, significantly improving the buyer journey and increasing conversions. Moreover, since the Walnut platform is housed within the cloud, salespeople can be confident that they will not be disrupted by any unexpected technical difficulties that prevent them from presenting a flawless demo. Thus, given the ongoing move to remote/digital sales, it’s fair to say that Walnut has found itself at the right place at the right time, and they just so happen to have the perfect product to back it up.
Goodlord
Goodlord is another London-based SaaS company that has been making waves as of late. The organisation recently secured a £27 million investment, which sets them well on their way to becoming the latest unicorn in the city. As for the product, Goodlord provides a cloud-based platform where letting agents can easily manage the rental process between tenants and landlords.
Unlike other startups in the prop tech sector that are typically designed to tear down the or completely revolutionize the traditional letting market, Goodlord’s SaaS platform is designed to assist all stakeholders, including traditional high-street leasing agencies, landlords, and tenants. In many ways, it enables letting agencies “digitize” the moving-in process through processes such as e-signatures and online rental payment collection. At the same time, renters benefit from a tenant dashboard and increased transparency. At the time of writing, Goodlord is being used by over one million tenants and landlords, and it processed more than £1 billion in payments last year. Total revenue more than doubled between 2020 and 2021, and the most recent investors anticipate a similar outcome by the end of 2022.
In summary
With each of them attacking a different vertical, it seems likely that these three startups will continue their ascension by bringing much-needed improvements to their respective industries. As long as they maintain their current trajectory and manage to increase their user base at even a modest rate, it’s likely that we will see these three names added to the ever-expanding list of SaaS unicorns.
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