FastForward Review: Global B2B SaaS edition
In the early-stage ecosystem, market feedback is the currency of truth. Founders can build or burn their initial business model hypotheses with live data from paying customers. For a VC looking to calculate investment risk, primary market data is worth more than Luna in late 2021 (too soon?)
At WaterBridge Ventures, we’re flipping the script and sharing more about our market feedback and what we’ve seen on the ground in the early-stage space. Earlier this year, we ran the third iteration of the WaterBridge Fast Forward program which saw 1,500+ applications in one month — our largest cycle so far. The opportunity to evaluate a volume of deals at this velocity helped us get our ears to the ground about what founders are building.
We learned a bunch and wanted to share some of our insights. Today’s exposé is from my favorite sectors, Global SaaS solutions from India to the world.
Global SaaS companies have been through a roller coaster of a ride these last few years. Lockdowns, pandemic crises, and the evolving future of work have created an unprecedented push toward SaaS with companies across the spectrum moving critical business ops to the internet.
Enterprise SaaS solutions built in India for the world have seen a massive boost in growth and funding over the last 24 months with over $10B invested into India-based SaaS businesses since Q1 2020. Our deal flow shadowed these trends with some clear and popular hotspots.
Enterprise-focused B2B SaaS solutions dominated SaaS applications with 35% of applicant founder teams focusing on selling to large global enterprise clientele. SME-focused startups accounted for 15% while vertical HR Tech solutions formed the third largest applicant pool with 9.5%. Infrastructure & System software solutions like DevOps, Cybersecurity, and eComm enablers showed exciting signs of growing popularity.
The vast majority of these businesses (80%+) had a B2B GTM with subscription-based revenue models and sales GTM motions that involve strong remote and passive selling approach models.
What worked
While all our investments from the FastForward program are still to be disclosed publicly (coming soon), we liked a few themes that have been clear drivers for adoption across global B2B companies. Experiences from our portfolio company Atlan also reflect this trend as promising founders seem to be building for companies of all sizes across three large overarching themes
(1) Future of work
- Remote work enablement (like Slack, Zoom, Asana, Miro)
- Distributed talent management (like Workday, Turing, Darwinbox)
(2) Business Modernization
- Digital business workflows (like Zenoti, Kissflow, Icertis)
- Digital Supply chain ( like Assent, Trax, E2Open)
- Online commerce (like Shopify, CleverTap, Magento)
(3) B2B ‘Consumerization’
- DevOps & Infrastructure tools (like Snowflake, Postman, Druva)
- Financial Services (like Square, Toast, Refinitiv)
These spaces have seen multiple upstarts innovating across both GTM motions, payment strategies, and integrated user experience vectors. New models mean a new approach to measuring market resonance — B2B users now expect high-end customer experiences similar to their B2C experiences which have meant a stronger emphasis on design, user flows, and product stickiness. Tracking engagement, retention, and product funnel metrics is now par for the course
Some resources to help you get started here, here, and here.
What didn’t work
Rejection will always be an uncomfortable feeling but as an early-stage VC investor, passing on an opportunity could be a result of a myriad of factors including sector exposure, cap table construct, fund lifecycle constraints, and many more.
For the purpose of this article though, I’ll delve into the ‘controllable’ factors for entrepreneurs. This only represents my point of view and I’ve tried to distill down the universe of reasons into a simple list of the 6 most common reasons
While not an exhaustive list, this encapsulates common pitfalls where teams can look to improve. Building a VC scale and profitable global SaaS business for the world takes highly differentiated product magic and high network effects (especially elusive viral growth) so collecting and tracking the right metrics helps potential investors build conviction and take discussions to the next level.
Looking across all Global SaaS applications (below) this year, we’ve seen some interesting trends with business model and operating model concerns the primary factor in our hesitance in this sector. As always, the best antidote is always live market feedback and primary data from customers with skin in the game. Typically, this means working closely with design partners for about ~3–4 months to help us get a sense of pay-ability, wallet share, and growth potential.
Continued customer engagement and detailed user stories from those live projects help investors gauge leading indicators of product-market fit and become a part of your tribe. We’re hoping that a good chunk of founders from this application cycle can refine their operating/business models and embellish their theses with more market traction to re-engage with both the WaterBridge Team and the larger VC ecosystem!
Looking Ahead
As we move into an interesting (albeit precarious) economic phase, a clear focus on deliberate capital will only sharpen. The days of unabashed growth at all costs are truly behind us and founders will now look to sustainably build strategic moats that are not based purely on cash burn and crazy CAC. B2B businesses and the SaaS business model, in general, tend to have strong monetization levers and inherent defensibility if executed right so this is an area of massive interest!
At WaterBridge Ventures, we’re excited by the large SaaS opportunity from India and the many possibilities it offers. Do reach out on LinkedIn, Twitter or write to nilesh@waterbridge.vc if you’d like to brainstorm.
