In a recent TrustRadius report on the growing Vertical SAAS market they pointed to an article by Brian Feinstein of Bessemer Venture Partners which pegs growth of Vertical SAAS market between 2010 and 2016 at 3X – from 50B to 150B. He ought to know. Bessemer has a large Vertical SaaS portfolio across education, real estate, construction, healthcare et all.
So what is fueling this growth? For starters vertical software companies ‘benefit from winner-take-most dynamics in their industries’. Once you have made some headway, it is easier to grab the majority of the market as ‘buyers buy what their peers are buying’. Exit opportunities have become more attractive as PE interest surges and public vertical software multiples grow.
The largest industries in the world will provide opportunities to the next crop of unicorns. However choice of market, flawless execution and ability to spawn ‘multiple acts’ including ‘M&A, Cross-sale of complementary products, marketplace development and integrated payments’ will be key, to get to the level of success a Veeva has had in the life sciences vertical.
Links to all referred articles and some additional data given below:
The Growth of Vertical SaaS & 7 Companies to Watch in 2018 / Brooklin Nash https://www.trustradius.com/buyer-blog/the-growth-of-vertical-saas-companies-in-2018/
Vertical software: a founder’s guide to success / Brian Feinstein https://medium.com/think-with-bvp/vertical-software-a-founders-guide-to-success-94e75d0a63d1
The Rise of Vertical Specific SaaS Vendors / Ran Ding https://www.nvp.com/blog/the-rise-of-vertical-specific-saas-vendors/
Vertical SaaS: What Is It & How Is It Different? / Nic Poulos https://bowerycap.com/blog/insights/vertical-saas-what-is-it-how-is-it-different/