The proliferation of SaaS, investing in Israel, and welcome Torii
SaaS (Software-as-a-Service) is everywhere. According to a new report by KBV Research, the global SaaS market is expected to attain a market size of $185.8 billion by 2024, growing at a CAGR of 21.4%. SaaS now touches almost every aspect of the modern business, regardless of industry, location, size, or company age. Amazing tools are available to do literally everything from helping startups manage their communications and people, via allowing agencies streamline their client processes and billing, to specialist products to drag hundred-year-old industrials into the 21st century. SaaS has evolved from being an interesting new way to sample lightweight products into the de facto software business model, delivering the greatest value to both customers and vendors (just ask Adobe).
Although SaaS is everywhere, companies often radically underestimate the number of SaaS tools they actually have in use. One unnamed SaaS company (who really should know better!) estimated they used “maybe fifty or sixty” tools but after a full audit — powered by Torii, more on them later — that number actually turned out to be around 10x that. 600ish software tools that users had signed up for, were actively using and/or paying for. 600ish software tools holding potentially sensitive corporate or user data. And the vast majority of them were not bought by, controlled by, or approved by IT.
I was first introduced to Torii by the company’s pre-seed lead, Avi Eyal of Entrée Capital. I happened to sit next to Avi at a post-conference dinner and we initially chatted about London (a sort-of home town for both of us) but quickly moved to business — the types of companies Uncork looked for, where we liked to invest, and would we ever consider investing in an Israeli business?
Since I joined the firm in 2015 (time flies!) the party line had been that we are totally focused on North American businesses but given the ever increasing cost of building in the Bay Area and NYC, I’d become extremely comfortable with investing in a US-based HQ with engineering and product based elsewhere (some recent Uncork investments have second centres in places like Ireland, Spain, Serbia, Belarus, and Colombia).
Given this, why not consider a company HQ’d elsewhere but focused on the North American market? The Israeli’s have been doing this forever (it’s not called ‘the Israeli model’ for nothing) and have really nailed it — people there understand their local market is small so are thus extremely comfortable with serving the US market remotely (and spending a lot of time on planes!). I’d recently returned from the Kauffman Fellows Global Summit in Tel Aviv where I’d loved spending time with local entrepreneurs and investors and was extremely excited to explore opportunities there.
At the end of dinner, Avi mentioned an interesting company who would be raising fundraising soon, and that he’d send me a deck in the coming days. Thus, I was introduced to Torii and I’m thrilled to announce that we led their $3.5M Seed round (alongside Entrée Capital, Global Founders Capital, Scopus Capital and Local Globe VC) earlier this year.
Torii’s SaaS Management Platform gives the IT department superpowers to discover, audit, vet and control the SaaS apps that employees use; to optimize SaaS license utilization; and to set up automated workflows that free up the IT team from many of their tedious, regularly mistake-prone processes.
I’d seen a few interesting companies in this space but hadn’t ever been excited enough to pull the trigger. In Torii, I found several extremely compelling reasons to invest: a highly experienced team who had experienced the pain of SaaS proliferation first hand, a strong focus on product excellence and building a magical experience for IT teams, a great network in their home country and an ability to hire great people, and a willingness to do whatever it takes to build the next great Israeli-American SaaS company.
Welcome to Uri H, Uri N, Tal, and the rest of the Torii team, and I’m excited to travel back to Tel Aviv in November and perhaps meet Uncork’s next Israeli deal :)