Despite economic uncertainty across many sectors, the SaaS industry is booming and is expected to continue gaining traction in the years to come.
2021 was a year with a lot of uncertainties, following the need for the world and businesses to adapt to a new normal because of the COVID-19 pandemic.
Both businesses and consumers saw a sudden requirement to adjust according to restrictions that are still present in many regions of the world.
Yet in the midst of this shift, the SaaS sector continued to flourish and expand rapidly, both in B2B and B2C markets.
SaaS is one of the UK’s largest ICT markets. The ICT sector includes both the Information Technology (IT) and telecommunication sector.
Indeed, SaaS is a rapidly growing sector, with 9.3% of the UK’s 34,815 high-growth businesses being categorised as SaaS companies.
The UK welcomes 3,237 active and striving companies that have huge growth potential, signalling the fact that SaaS provides major opportunities for investors.
If the SaaS sector continues to grow at this pace, cloud solutions are expected to overtake the use of on-premises software in value by 2025, with the global SaaS market expected to be worth approximately $1 trillion.
The attractiveness of the SaaS sector for investors has been made clear from a recent Beauhurst report, which found that 52% of VC investors are focusing on SaaS start-ups.
This is encouraging for the 61.4% of the UK’s 3,237 SaaS companies which are at the seed or venture stage, and the 13.5% at the growth or established stage, yielding huge potential for investors to get involved in early-stage SaaS business
The SaaS industry, according to forecasts and analyses, is expected to grow by $100 billion between 2021-2025.
SaaS businesses are incredibly capital efficient, as 49% of all SaaS-funded VCs that have exited, raised less than $10m before their exit, based on insights from Crunchbase.
The total value of closed deals in 2021 was more than double that of 2020. A large part of this was driven by SaaS which accounted for over 50% of capital invested over the last 12 months.
This exceptional growth will unavoidably create some great incentives for investors to look more deeply into the SaaS industry and get involved in this sector.
While it is hard to predict the future, the SaaS industry will likely see strong years to come.