I am pleased to share our first annual State of SMB Software Report, looking at fundraising and exit activity in the Small and Mid-Sized Business (SMB) software space.
We decided to start small: For our first edition we focused on SaaS companies based in North America that serve the SMB market. Over time, we will expand our scope both in terms of geography and delivery method / business model.
To find the North American SMB SaaS companies that completed a transaction last year, we analyzed over 4,800 deals, narrowing them down to 234 fundraising transactions and 68 exits.
These companies raised over $1.9B in 2016. In addition, the SMB exits with disclosed valuations generated total sales proceeds of over $8.6B.
The companies in this report are diverse. Some are purely focused SMB while others sell to both small and large customers.
While many vertical markets were covered, back office solutions and marketing tech solutions were dominant segments. We see back office as a growing market category. The growth in back office software is being driven by a change in demographics. Previous generations of entrepreneurs ran their business on pen and paper or spreadsheets. The new generation does not.
Similarly, despite the intense fragmentation in marketing technology, new fundings and exits remain strong. Marketing is an increasingly complex and technical challenge. Small business owners are getting more sophisticated in their online marketing needs.
I hope you find this report useful and invite you to get in touch to discuss it with us.