Before explaining who are the two leaders in the investment In SaaS, let's explain what the sector is and how it differs from its counterparts, PaaS and IaaS.
The SaaS market is currently a young market with good prospects for the future.
SaaS involves third-party providers hosting, maintaining and supporting software requirements with lower upfront costs and eliminates the need for organisations to install and run applications in their own environment or data centres. But, although the service is very similar, the main difference between SaaS, PaaS and IaaS is the degree of control and access the user has over the platform. While in SaaS you have little control and access, in IaaS you have a high degree of control and access.
Founded in 1972 by Donald Thomas Valentine, Sequoia Capital is one of the giants of SaaS investing. Headquartered in Menlo Park, California, Sequoia focuses its investments on finance, energy, enterprise, healthcare and the internet.
Its business investments are now heavily weighted towards SaaS, taking ideas from all sectors and helping a small number of entrepreneurs reach their full potential each year.
In total, they have invested in 1,222 companies, with their SaaS portfolio that includes Zarget (acquired by Freshworks), a web optimisation and marketing platform; and, Namelya human resources platform.
The SaaStr Fund, a $90 million venture fund, was born out of the part of SaaStr that focuses on helping founders launch and scale SaaS companies. This fund is pooling its resources and energy to assist in early-stage funding, aimed directly at SaaS startups, B2B and startup companies.
The fund dedicates between $500,000 and $6 million for each start-up, while providing expertise to support and promote their ventures. They will also assist their projects by appointing C-Suite staff to run the company's operations.
Among the SaaS start-ups in which they have participated are Mixmaxa productivity-enhancing software; Automilea commercial fleet and asset tracking and management system; and Teamablea platform for employee referrals and more diverse recruitment.