Why B2B SaaS StartUps are on the Rise?
B2B SaaS startups are in high demand In the software business. These startups use the software as a service (SaaS) to address unique business challenges and demands. The SaaS market is competitive, and so are the B2B SaaS marketplaces.
What is B2B SaaS?
B2B stands for business to business. B2B SaaS is a type of software that allows businesses to sell their products or services directly to other businesses. The emergence of B2B SaaS startups may be about to make a splash in the B2B market. Nearly 80% use at least one SaaS application in their businesses.
- Benefits of B2B SaaS products
- B2B SaaS market growth
Why the recurring revenue model is appealing to investors?
Recent SaaS funding stories
- The latest B2B SaaS technology trends
- New B2B SaaS marketing model that succeeds
Benefits of B2B SaaS productsThere are many benefits of using B2B SaaS platforms for your business. Here are some of the key benefits:
- B2B SaaS platforms can minimize the time spent on installation and configuration using cloud-based SaaS apps, making deployment faster and easier.
- B2B SaaS apps are easy to implement and downloading the software is no longer needed.
- Subscription-based SaaS apps and licensing make it possible to use the data while scaling.
- B2B SaaS providers manage upgrades, and modifications are performed on the back end, enabling your staff to focus on a more critical part of the business at hand.
- Improved communication with the customers and within the company.
- Increased efficiency and productivity. Businesses are able to access the latest technologies, share and access the data from anywhere due to centralized storage makes the employees work smarter and achieve a high return on their investments. Learn more about SaaS.
According to the icstd report, Salesforce, Microsoft, Google, Adobe creative cloud, FreshBooks, and Paychex are the top B2B SaaS companies.
Organizations that encourage citizen development will increase productivity and operational efficiency in today's business world, which is undergoing a revolutionary transition. No-code SaaS gives them a much-needed lifeline, enabling business agility, boosting growth, and improving creativity by driving automation throughout the business.
B2B SaaS market growth predictions
There are too many reports to count, but the trend is clear. B2B SaaS companies are moving at a rapid pace. The report from the Business Research Company in early 2021 is the most promising. It is noted that the SaaS market will reach $272.49 billion in 2021 (20.8% compound annual growth rate) and will continue to grow to $436.9 billion by 2025 (CAGR of 12.5%). CAGR is the indicator most used by investors to measure the potential of a SaaS company.
According to Gartner's forecast, SaaS industry revenue will grow to $120 billion in 2021 (considering a brief slowdown due to the impact of a pandemic). It is anticipated that by 2022, 78 percent of organizations will be running on B2B SaaS.
Why the recurring revenue model is appealing to investors?
- Recurring revenue is a key metric that helps to determine how much money you spend on marketing, sales, and other activities. It is also an important metric to consider when evaluating the value of a product or service.
For entrepreneurs, the B2B SaaS model is an attraction because the revenue stream is predictable as end-users pay monthly, quarterly, or annually. In the recurring revenue model, the end-user will pay for the service within a certain period of time, which is called the customer life cycle. If the customer is satisfied with the service, he will keep it for a long time, and over time, the seller will get more benefits from the customer. However, if customers are not satisfied with the service, they will quickly stop paying and quit. This may result in losses for the B2B software provider because the cost of acquiring customers is usually very high. Acquiring customers and retaining them are the two factors that are critical to the success of any B2B SaaS.
- Scalable Because they generate a predictable cash flow to invest in B2B SaaS growth, the recurring revenue business is easier to scale. With the insights from the data provided by the subscription model, companies can understand their cash flow and invest effectively in business growth with minimal risk. When the product/service achieves standardized quality and subscription value, you can be confident that it will minimize customer churn and maximize recurring revenue from existing satisfied customers.
- Visible You can make B2B decisions in advance. In case of unexpected changes, there will be sufficient warnings and time to reschedule.
- Durable For recurring monthly income, you will never start a month from scratch. With accurate predictions and deep insights, you can use the information gathered to reduce risk when making important decisions about how to start a new SaaS business or reduce customer churn.
- Flexible If your need changes, you can expand or reduce the subscription, speed up or slow down the subscription. This is beneficial to both customers and your B2B SaaS.
Recent SaaS funding stories
The Indian B2B and B2C SaaS ecosystem has produced 70 unicorns as of 2021. "From the most registered financial transactions to the most increased unicorns in a quarter, investors’ confidence in high-quality digital businesses has increased like never before,” PGA’s Director of Competitive Intelligence told PTI Labs, Abhishek Maiti.
Fintech firms incorporate technology (such as AI, blockchain, and data science) into conventional financial sectors to make them safer, quicker, and more efficient. Fintech is one of the fastest-growing digital industries, with SaaS businesses innovating in nearly every aspect of finance, from payments and loans to credit scoring and stock trading.
Fintech is the SaaS industry with the most financing, representing 27% of the total value of the transaction in the reporting quarter. This is followed by food technology (13%), b2b technology (11%), educational technology (10%), and media and entertainment (8%). Approximately 100 startups received funding in the early stages, representing 9% of the total funding.
An Indian SaaS-based startup announced on August 19, 2021, that it had received $225 million in funding. This funding round is round D, led by Insight Partner. The investment fund is based in New York and is also an existing investor in this startup. Postman was founded in 2014 as an API platform for creating and using APIs. This SaaS startup is committed to simplifying every step of the API process and helping collaboration so that better APIs can be built quickly without wasting too much time.
An AI-supported voice-over SaaS startup founded by IIT Kharagpur alumni in October 2020 has raised $1.5 million in seed funding, headed by Elevation Capital. This SaaS startup aims to provide high-quality dubbing by placing a simple online voice studio in the hands of every content creator. The Murf technology platform is available in 15 languages and has a customer base in more than 80 countries. The SaaS startup claims that its revenue has increased 12 times, 80% of which comes from the United States and the United Kingdom.
B2Brain, an early-stage B2B SaaS startup announced on August 26, 2021, that it had raised $1 million through its Ideaspring capital seed fund and Arka Venture Labs. B2Brain made it easier for sales teams to gain contextual knowledge of target customers' manuals. The B2B SaaS startup provides relevant and personalized publishing topics for the sales team, all of which are integrated into their CRM system. Integration with leading CRMs such as Salesforce, HubSpot, Outreach, and SalesLoft can help sales teams realize the value that B2Brain brings to their businesses in the first few hours of using it.
To be competitive, SaaS businesses must keep up with the newest B2B SaaS application development trends. They'll have a better chance of creating a lucrative software-as-a-service offering this way.
The Latest B2B SaaS Technology trends
- Artificial Intelligence
Advances in AI technology open many B2B SaaS opportunities. Many recently launched B2B SaaS startups use AI-based technologies. It is expected that this will increase by 14% from the present until 2030 of the AI GDP. This indicates that early birds will be a significant advantage in the coming years.
Grammarly, a pioneer in AI-based language detection and improvement technology, combines deep learning and natural language processing into its SaaS business. This SaaS platform provides great real-time language and grammatical advice to the user using the AI-enabled text editor.
Read more: What Is AIaaS? AI as a Service Explained
- Augmented reality
Augmented reality (AR) is an enhanced version of the real physical world, which is achieved through the use of digital vision, sound, or other sensory input transmitted through technology.
Onirix is the flagship product of Neosentec, a software development firm located in Asturias, Spain. AR is a sophisticated technology that often needs software development to fully realize its potential. This B2B SaaS startup provides creators with a fully scalable cloud platform that takes them from scene creation to uploading their own AR experiences without requiring them to write a single line of code.
VR Vision Inc specializes in 360-degree video production, web and mobile application development, and AR and VR application development. The B2B SaaS platform developed training and health care, education, and other types of applications and experiences.
- Distributed cloud
Distributed cloud technology brings public clouds closer to private networks and specific locations, making the process smoother, with lower latency, and requiring less bandwidth and storage components. That is why artificial intelligence and robotics are applicable to almost any B2B SaaS, regardless of size or budget.
Thanks to cloud products provided by Google, Microsoft, Amazon, and more and more start-ups and spin-offs, pioneers in various fields could implement cutting-edge technologies with no early investment in tools, equipment, or professionals.
Zoom Cloud Meetings (Zoom) is a video conferencing B2b SaaS developed by Zoom Video Communications. The free plan allows up to 100 people to participate at the same time, and the time limit is 40 minutes. Users can choose to upgrade by subscribing to a paid plan. The maximum plan supports a maximum of 1,000 concurrent participants, and the meeting duration is up to 30 hours.
During the COVID-19 pandemic, the use of this B2B SaaS platform for remote work, distance education, and online social relationships has increased significantly. This growth makes Zoom the fifth most downloaded mobile app worldwide in 2020, with 477 million downloads.
Read more: What is a distributed cloud?
- No-code SaaS
The distinctive feature of these no-code SaaS platforms is that they eliminate most of the manual coding that takes up an engineer's time. There is no code that permits an automation layer to compress time and speed up the ability to develop software up to 10 times faster than it is now. They may use cloud computing services like AWS, Google Cloud, and Azure to build SaaS apps and push them into the SaaS market faster and for affordable money.
Undaku, a robust no-code B2B SaaS startup, allows the creation of B2B SaaS apps online without coding that improves the customer experience, automates processes, and delivers workplace innovation quickly and easily. Book a demo to know more.
Tip: Embrace the B2B SaaS technology, offer genuine value to customers and prioritize client retention. Keep an eye out for these emerging trends in SaaS development that will help you thrive in your SaaS business.
New B2B SaaS marketing model that succeeds
- Digital channels
Using multiple digital channels is an effective way to grow your B2B SaaS business. Invest in paid and organic acquisition strategies, such as paid advertising on Google, Facebook, or public relations activities to accomplish some fast traffic wins. Create different varieties of promoting content, research keywords for the target audience, and monitor metrics so that you can gear things up and explore until you track down your ideal blends.
Focusing on and fulfilling clients’ searches is Google's ultimate priority. According to HubSpot, 75% of searchers never go past the very first page of indexed lists. B2B SaaS is a more competitive market. To be successful in B2B marketing strategy, SEO is very crucial. Implement SEO best practices for B2B SaaS startups to attract potential customers.
- Referral marketing
It's a viable B2B SaaS promoting procedure, as it builds the odds of getting qualified leads. Even your most fulfilled clients might require a little push to allude you to friends. This is the place where a referral program with shrewd motivating forces or rewards enters the timeline. Offering access to an additional feature or a more significant level of your B2B SaaS product as a trade-off for a reference is a genuine model.
Dropbox gives clients additional extra storage space if they refer friends. Referral advertising transforms your present clients into brand advocates. Referred leads convert 30% better and have a 16% higher lifetime esteem than leads got through different channels.
According to Gartner, 75% of all databases will be deployed on cloud platforms by 2022, largely for analytics and as part of popular B2B SaaS services. Organizations are seeing more and more costly and productivity savings because of their cloud database investments.
The analysis highlights new opportunities to increase customer acquisition strategies and expand your B2B SaaS business by getting a high return on investment (ROI).
- SaaS automated workflow
Once you have clarified your SaaS life cycle and metrics, it is time to create an automated workflow for your B2B SaaS. You need to customize your marketing automation plan to suit your SaaS and the unique needs of your customers. For example, automate your social media posts to run at the time of day when they are most likely to reach your B2B audience. By automating sales, marketing, and customer service departments, you can free up staff time. They will focus on more complex tasks and provide better customer support. Ultimately, this will provide your B2B customers with a better branding experience.
- Content marketing
The B2B SaaS content marketing is competitive-it's about creating and distributing valuable, relevant, and consistent content that not only attracts but also retains a clearly defined audience. When you create valuable, useful, and interesting content, your audience will learn that they can trust you, and they can see that you understand your topic. Not only that building credibility also allows them to understand your personality and how it feels to work with you.
The ultimate goal of B2B SaaS content marketing is to increase brand awareness and attract the target audience.
Generate leads from content by adding CTAs and forms to each of your SaaS blogs and landing pages. Deals and discounts are also critical for upselling and cross-selling. Offers can assist with showing B2B targeted clients they can get higher worth with you. The exclusive anchor text and positioning of the CTAs are vital.
- Video marketing
We saw the rapid ascent of YouTube and the first viral videos in the 2000s. Demand for social media is another key element that has fueled the growth of video marketing and is the perfect B2B SaaS online marketing strategy.
Since customers prefer the visual experience, videos can engage viewers more effectively than text-only information. A video bridges the gap between a demo and an email. You must determine who you are attempting to target, where they are in your sales funnel, and why video content will have an impact on them. Product demos, brand stories, and case studies, serve as social proof and build trust in your B2B SaaS which can drive conversions.
According to Cisco, online videos will account for more than 82 percent of all B2B consumer internet traffic by 2022, a 15-fold increase from 2017.
Read the ultimate B2B video marketing guide for 2021 to know more.
- Free trials and / Freemium model
With organizations like Dropbox, Zoom, Hootsuite, Trello, WordPress, and Slack going public, the freemium model is clearly on the rise, While their freemium business model undoubtedly aided widespread adoption, these SaaS products may have been successful with a different business strategy, perhaps not as rapidly.
The commercial industry has seen ups and downs in the interest in the freemium model, a SaaS company gives away one version of its product for free in order to upsell consumers to a more feature-rich paid version. Make the process of upgrading as simple as possible. That means making the paid version upgrading process straightforward; don't confuse your B2B consumers with a variety of payment options - for a subscription, provide monthly or yearly payments. Make them easy to sign-up. Ensure your SaaS onboarding cycle is clear and proficient. Try not to request data that isn't basic to getting a new client enlisted. Delivering outstanding services to your B2B SaaS customers is also very important for customer retention.
- Industry exposure
It's basic to get your B2B SaaS business industry exposure on one of the many SaaS review sites, B2B communities, and forums. Getting a positive review on a review site will drive traffic to your site. It is a splendid effort to get a listing on whatever number of review sites could be allowed. You may not get included in every one of them. Having a presence across sites gives social verification and persuades target clients of the potentiality of your B2B SaaS.
Future of the B2B SaaS market
The sudden shift in global trends and the rise of "remote everything" from learning to work will promote the software and service industry. The worldwide SaaS business is estimated to be valued at $60.36 billion by 2023, representing a 9% gain over the following four years.
And funding to help maintain and grow their business, Indian B2B SaaS companies are now more focused on deepening into the international market. By 2025, the total turnover of the Indian SaaS market segment is likely to reach 75 billion U.S. dollars.
"By 2030, India's SaaS ecosystem may be worth $1 trillion, which will be one of the largest value creation opportunities we see in the next decade. It is touted as growing at a compound annual growth rate of 18%," Noshir Kaka, senior partner at McKinsey said.
The software accounts for 20% of total technology, and business expenditures, but the value it creates is close to 50%. The SaaS industry is worth USD2.6 billion, has approximately 40,000 employees, and is expected to increase revenue by 20 times by 2030. This story goes beyond this tremendous opportunity.
According to a PwC India study titled 'Startup Perspectives - Q3 CY21' issued on October 19, 2021, Indian entrepreneurs raised a total of $10.9 billion across 347 agreements between July and September. This is more than double what they raised in the same three months in 2020, and 41% more than in April-June. Fintech, edtech, and software-as-a-service (SaaS) accounted for over half of the capital raised during the three-month period.
B2B SaaS Marketing Challenges
By the end of 2021, almost all organizations will be adopting more than one SaaS solution. The challenges of B2B SaaS include the fact that the market has become very competitive. Some of the growth challenges of SaaS include competing with other B2B SaaS companies, the need to prove value (when the return on investment may be uncertain), and having to sell during tough economic times.
Identifying the market and developing a product that meets its needs is critical when it comes to building a successful B2B SaaS startup. SaaS founders have to be drilled down into their target to truly get it to their market. Who are the buyer personas and how will you get them? What issue is your target looking to solve? How do they compare and select items? How will your clients advantage from your benefit? If you have solutions, you can achieve faster growth.
Managing B2B SaaS Startups can be a problem if you don't have a solution for managing SaaS applications like HR, accounting, subscription, and invoices. False B2B SaaS stacks can risk your long-term SaaS adoption. And in the age of automated reporting, you can fly blind on a mind filled with SaaS.
Integration issues have been a key factor in the growth of this market. There are self-evident concerns about security, backup and storage, and how to fit these SaaS apps into an existing model. As far as integrations are concerned, the quicker and simpler they are the way better!
These are the most important reasons leading to the difficulties and challenges of B2B SaaS today.
Establishing a doable B2B SaaS model
B2B SaaS is now utilized by almost every enterprise. As long as the client turnover (churn rate) rate is higher than the client acquisition rate, the SaaS startup will fail. This is why B2B SaaS startups must focus on maintaining control over churn rate, not just maintaining their growth as speedy as possible.
The relevance of digitization in business has been proven repeatedly in recent years. Traditional web development have all had substantial downtimes, which is now more than ever unacceptable. It's for this reason that companies should consider moving to cloud-based B2B SaaS apps that don't require in-house servers or traditional development methods.
Undaku is an excellent solution for the above challenges. Try our free trial if you are ready to seize the future of SaaS by the digital horns and profit from your own data-driven SaaS business. Bring new ideas to SaaS business and provide B2B clients with innovative solutions.