Software-as-a-service (SaaS) goes back to 2005 when John Koenig first came up with the term. Since then, it has experienced rapid growth with Gartner estimating that global end-user spending on SaaS will reach $208.08 billion in 2023.
SaaS offers convenience, cost-effectiveness, scalability, and flexibility making it the preferred option for a majority of businesses today. Thus, SaaS solutions are one of the fastest-growing segments in the IT industry.
What is a SaaS company?
SaaS is an online software delivery business model wherein software applications are accessed by customers from a centrally hosted, cloud-based system via a subscription plan instead of downloading them.
SaaS companies maintain the servers, databases, and other software that allow the SaaS product to be accessed and used. SaaS applications can be accessed through web apps, desktops, or mobile apps.
SaaS companies have a variety of pricing strategies:
- One fee for all users
- Different fees based on subscription tiers
- Different fees based on user types
- Pay as you go
Why are businesses shifting to SaaS products?
- No need to download the software on your computer or update it
- Can be accessed from any device anywhere in the world via the Internet
- Lower subscription cost as compared to the cost of traditional software
- Requires less time to launch the software and begin using it
- Can be availed on per user basis
What is the SaaS business model?
The SaaS business model is characterized by the following features:
- Recurring subscription fees
- Consistent updates
- Increased customer retention
Recurring subscription fees
Customers do not buy hardware; instead, they pay a monthly or annual fee to use the SaaS product. Recurring payments become the monthly recurring revenue (MRR). Since SaaS companies provide a service, it is challenging to properly account for revenue.
They may get some money after a customer subscribes, but that money remains a liability until the SaaS company has successfully delivered the service. Thus, revenue recognition is an important aspect of the SaaS business model.
SaaS companies consistently provide small upgrades like new features, product enhancements, or enhanced versions for their SaaS product to improve their customer lifetime value and delight users. It helps SaaS companies be more responsive to the feedback and needs of their customers.
SaaS companies also constantly screen for security vulnerabilities in the software to protect sensitive customer information from malicious entities.
Increased customer retention
Customer retention is paramount for SaaS companies because, without paying customers, there is no revenue generated. Thus, there is a greater focus on customer service and upselling than traditional software companies.
Since customers pay a recurring subscription fee, if they don’t get the type of service they want, they can quit at any time and move to a competitor.
What are the different SaaS categories?
While the range of applications in SaaS is unlimited, some of the most popular categories are:
- Web hosting and eCommerce: They include shopping carts, content management systems, and message boards that help online businesses work and provide a good customer experience. E.g. Shopify
- Communication platforms: They include file sharing, instant text messaging, and other collaboration tools to help remote teams and distributed teams work effectively. E.g. Dropbox, Slack
- Customer relationship management (CRM): They help companies automate marketing tasks, track sales, manage customer information, and so on. E.g. Freshworks
- Accounting: SaaS accounting services enable companies to handle the accounting functions themselves. E.g. QuickBooks
- Payment gateways: They provide a way for people to conduct secure and convenient transactions online, such as processing bank transfers, making credit card payments, running offers, and tracking coupons. E.g. Paypal
- Human resources: They help businesses streamline HR tasks like hiring, scheduling interviews, tracking employee work hours, and automating payroll functions. E.g. Lattice
- Project management: They include end-to-end project management tools that help manage all aspects of executing projects. E.g. Monday.com
10 SaaS brands to watch out for in 2022
Here are 10 SaaS companies that have made tremendous progress in their fields and are worth keeping an eye on:
Headquartered in Tallinn, Estonia, POSTOPLAN is an automated marketing platform for social media and messengers. It enables users to manage their accounts and schedule posts on social media platforms and messengers with no limit on the number of accounts. The SaaS startup claims to reduce the workload of social media managers by 40 percent and drive 70 percent more subscribers and traffic on social media.
Founded in 2019, POSTOPLAN targets small-medium businesses, marketing agencies, and freelancers, and its pricing starts at $1.9 per month. CEO and founder Alex Bozhin says, “We are allowing our users to use a free subscription with no time limits. And it works, as more than 15,000 clients have stayed with us and purchased premium subscriptions. This rate of retention is 5% higher than the average market benchmark.”
POSTOPLAN raised $1.5 million in a seed round in July 2021 led by investors TMT Investments and YellowRockets. It intends to use these funds to strengthen its position in the US market.
The company also claims to be the world’s first platform to offer the creation and automatic scheduling of WhatsApp posts. Currently, it has 30,000 registered users across 140 countries.
Category: Social media management
Founders: Alex Bozhin, Katerina Sukhenko, Dmitry Kann
Founded in 2013 and headquartered in San Francisco, Notion is an online work collaboration platform that combines note-taking, project management, collaborative documents, and wikis. It enables teams and individuals to collaborate and plan their workflow and improve productivity at work.
It has a customer base of 20 million users and serves businesses like Spotify, TravelPerk, Pixar, Headspace, and Cornershop. Its subreddit community on Reddit has 150,000 subscribers, which is six times that of Zoom and ten times that of Slack.
In 2020, the company became a unicorn. Notion is currently valued at $10 billion after it raised $275 million in Series C funding in October 2021. It also acquired Automate.io in September 2021 for an undisclosed amount. VC firms like A* Capital, Base10 Partners, Fika Ventures, Shine Capital, and Active Capital have invested in the SaaS company.
Akshay Kothari, COO, says, “Our aim for Notion is that we can connect to other tools that people may be using. So for example, if a company uses Salesforce as their CRM, we want people to be able to update their accounts in Notion, and then that updates Salesforce automatically.”
Notion has a free Personal plan along with paid plans that start at $4 per month (Personal Pro).
Category: Knowledge base
Founders: Ivan Zhao, Simon Last
Apollo.io is a data-driven, account-based B2B sales and engagement platform with tools for prospecting, engaging qualified leads, and generating greater revenue. Its database has more than 220 million contacts and 30 million companies with robust and accurate data.
Teams can employ Apollo’s Engagement Suite to scale sequences and outbound activity. They can also establish a go-to-market strategy using the platform’s Intelligence Engine that generates best-practice analytics and recommendations to close more deals.
Founded in 2015, Apollo.io has received funding from VC firms like Sequoia Capital, Alpha Partners, Heavybit, and NewView Capital. In Jan 2022, it raised $110 million in Series C funding.
Co-founder Tim Zheng says, “Sales reps that were averaging 10 to 12 meetings can look to book three times that amount using Apollo.” The company has had over 9,000 customers and 1 million user signups.
Apollo has a freemium version with 50 email credits and its basic plan costs $49 per user per month. The platform integrates with other sales tools like HubSpot, Salesforce, Marketo, Sendgrid, and LinkedIn.
Category: Sales intelligence
Founders: Tim Zheng, Ray Li
Founded in 2019, Hopin is a live online events platform that supports virtual, hybrid, and onsite events. Each Hopin event has several areas: Reception, Sessions, Stage, Expo, and Networking. Each area enables personal interaction over live video with speakers, attendees, sponsors, and vendors.
The software supports live broadcasts, pre-recorded content, and RTMP streams. It is an all-in-one platform offering registration, email, live streaming, and analytics. It integrates with Eventbrite, HubSpot, Miro, Mailchimp, Zapier, Pardot, Slido, and Adobe Marketo Engage.
Hopin offers a freemium version for up to 100 registrants. Its paid plans start at $99 per month (Starter plan). Its customers include Unilever, tech-focused media and events company IDG, and advertising agency WPP.
Founder Johnny Boufarhat says, “The big focus is creating a bridge between online and in-person. We’re going deeper and deeper to add more features — we’ve improved registration and we just released a website builder for event facilitators. We are also building out the Hopin platform to be an all-in-one for event management.”
The company saw rapid-scale growth at the beginning of the COVID-19 pandemic and even acquired five companies in 2021, most notably StreamYard for $250 million. It reached a $2 billion valuation faster than Slack and Bird, and is valued at around $8 billion currently.
Category: Virtual event platforms
Founder: Johnny Boufarhat
TestGorilla is a pre-employment testing software with a one-way video interviewing function designed to help hiring teams manage the entire hiring lifecycle, including creating assessments, inviting candidates, and performing a detailed review of the results. The platform enables testing for specific job skills, soft skills, language proficiencies, cognitive abilities, motivation, and cultural fitment.
According to co-founder Wouter Durville, “TestGorilla’s assessments highlight high-potential candidates, many of which they may not have been considered on the basis of their CV. It also puts an end to costly mishires.”
TestGorilla integrates with major ATS like SmartRecruiters and Greenhouse. With its blind, data-driven approach and proprietary technology and methods, it is effectively removing unconscious bias in hiring.
Founded in 2019 and headquartered in Amsterdam, TestGorilla has big-name clients like Bain & Company, Sony, PepsiCo, and the NHS. As of June 2021, the company raised $9.7 million in seed funding to help it continue creating a comprehensive testing library.
TestGorilla offers a freemium version to help customers get started with the platform. Its paid plans — Pay as you go ($25 per month), Scale, and Business — cater to different hiring needs of businesses.
Category: Pre-employment testing
Founders: Wouter Durville, Otto Verhage
Headquartered in Vancouver, Dooly is a connected workspace platform that enables the sharing of critical deal information with people and systems in real-time so that revenue goals are successfully met.
The software automates the busy work involved in updating data in sales software, especially Salesforce. It uses AI-based tools like natural language processing to take notes, update tasks, and feed the learnings into other applications intelligently so that they work correctly.
Founder and CEO Kris Hartvigsen claims, “Dooly gives sales reps five hours back per day to do what they love: sell.” The software integrates with GSuite, Slack, and other popular apps. Apart from populating relevant data across several apps, it also provides suggestions on closing deals based on the data it sees.
Dooly currently has 500 customers, including Asana, Intercom, BigCommerce, Figma, Lessonly, Contentful, and Procore. The company has raised $80 million in Series B funding in 2021, adding to the $20 million it had previously raised in Series A funding. Currently, Dooly is valued at over $300 million.
Dooly offers a freemium version for up to 3 users per month. Its paid plans start at $12 per user per month (Pro plan) and go up to $70 per user per month (Premier plan).
Category: Sales enablement
Founders: Kris Hartvigsen, Justin Vaillancourt
7. SEON. Fraud Fighters
SEON is an online fraud prevention platform that identifies and prevents fraud in real-time using transactional data analysis. Headquartered in Budapest, SEON’s software uses human intelligence algorithms and machine learning to gather information about transactions. It combines IP address analysis and email verification to identify transactional and behavioral fraudulent activities.
As of April 2022, SEON raised $94 million in a Series B round of funding. Angel investors like Jan Deepen, Daniel Dines, and Emilie Choi have a minority holding in the company along with VC firms like Creandum and IVP.
According to CEO and co-founder, Tamas Kadar, “SEON is bringing something different to the fraud prevention market by offering an accessible and flexible solution, which delivers instant results. Once discovered, our solution can be trialed by potential customers in less than 30 seconds and up and running in less than a day.”
Pricing starts at $99 per month for SEON’s Intelligence Tool and at $0.06 per check for SEON’s Sense Platform.
Category: E-commerce fraud protection
Founders: Tamas Kadar, Bence Jendruszak
Founded in 2011 as RealtimeBoard, Miro is a cloud-based visual collaboration platform for small to mid-sized companies. Co-headquartered in Amsterdam and San Francisco, the company serves 90 percent of the Fortune 100 companies.
Miro allows cross-functional teams to use the digital whiteboard for collaborative activities like creating customer journeys and user story maps and wireframing. Users can create schemes and mockups, attach files or objects like videos to the boards, and convert boards into presentations or save them as PDFs.
In 2020, the company launched a community-driven template library called Miroverse that offers different types of readymade activities and workflows. It includes tools from regular Miro users like design sprints for remote teams and product discovery and ideation.
Pricing begins at $8 per user per month and the company offers a freemium version. As of December 2021, Miro raised $400 million in a Series C round of funding. It counts Atlassian, Dragoneer Investment Group, Dig Ventures, Daniel Springer, and Andrew Ofstad among its investors.
Category: Collaborative whiteboard
Founders: Andrey Khusid, Oleg Shardin
Founded in 2019 and based in Singapore, CocoFax is a cloud-based HIPAA-compliant and PHIPA-compliant fax service provider that integrates with Slack, GSuite, Chrome, Microsoft, and others. It enables individuals and small-medium businesses to send and receive faxes securely and reliably (2FA and AES 256 and TLS 1.2 encryption) using a computer or cell phone.
Companies can also integrate CocoFax into their workflow, add team members, and assign roles and numbers to their accounts. Pricing begins at $4.99 per month with the Lite plan and interestingly, the company offers a 30-day money-back guarantee.
Category: Online fax
Founder: Olivia Tan
Founded in 2018, Qualified is a conversational marketing platform for enterprise sales and marketing teams. It enables B2B companies to develop their sales pipeline through real-time website conversations with qualified leads. Custom chatbots help engage target accounts and top visitors. Pricing begins at $2,500 per month that includes live chat and custom chatbots.
As of May 2021, it raised $51 million in Series B funding. VC firms Salesforce Ventures, Redpoint Ventures, and Norwest Venture Partners have invested in Qualified. The company boasts of enterprise customers like VMWare, Tech Data, SurveyMonkey, Sodexo, Adobe, Talend, Poly, and Matterport.
Co-founder and CEO, Kraig Swensrud, says, “Conversational sales and marketing is no longer a “nice to have.” It’s mission-critical for fast-growing businesses, and table stakes for modern buyers.”
Category: Conversational marketing
Founders: Gopal Patel, Kraig Swensrud
The ubiquity and popularity of SaaS can be understood in the manner in which the software industry biggies have shifted toward it, including Microsoft, IBM, Oracle, and SAP.
Ever since Salesforce launched its CRM as the first SaaS solution in 1999, SaaS adoption has increased by leaps and bounds—most recently boosted by remote work due to the pandemic. As a result, newer trends like leveraging AI in SaaS applications, growth of micro-SaaS and vertical SaaS, and low-code/no-code platforms are taking shape.
Pratik Dholakiya is the Founder of Growfusely, a SaaS content marketing agency specializing in content and data-driven SEO.