Nice example of a VC firm doing research in a space to benefit SaaS builders. In this case vertical saas opportunities and strategies.
SaaS executives
At Tidemark, we know the opportunity in Vertical SaaS is just starting to unfold.
Some of the best businesses in the world are Vertical SaaS companies that have grown into incredible platforms–we’re fortunate enough to have worked with almost a dozen that have scaled to over $100 million in revenue–but the path to get there can be murky.
While building a Vertical SaaS company has been compared to making a layer cake by following a recipe, we know it’s not that simple. Vertical SaaS CEOs frequently ask us questions like: When is the right time to go multi-product? What are the right products to expand into? How should I think about building payments and lending products? How should AI fit into my strategy? There are complex product decisions for which no clear answers are readily available.
Since the beginning, we’ve been committed to helping Vertical SaaS operators by providing frameworks to help scale their businesses. We then created communities of collective knowledge and earned wisdom around these frameworks. Through these initiatives, we’ve heard from Vertical SaaS operators that they lack the right data to help them make decisions.
That’s why we’re so excited to launch the 2024 Vertical & SMB SaaS Benchmark Report. We collected information from nearly 250 Vertical SaaS operators to provide data that no one has publicly gathered before. The report covers industry-specific metrics and benchmarks for a wide range of topics, including attach rates and revenue lifts from launching new products. Ultimately, this report is meant as a guide to help Vertical SaaS executives make data-driven decisions.
Key Survey Findings
Who Completed The Survey?
We surveyed 246 vertical SaaS vendors representing a mix of sectors, ARR ranges, geographies, and funding stages.
The Vertical SaaS Knowledge Project
This survey quantifies the Vertical SaaS trends we’ve seen over decades of investing and shows our Vertical SaaS Knowledge Project (VSKP) in action. The VSKP provides vertical SaaS leaders with a guide on how to scale their companies through strategic frameworks and case studies. At its core, the VSKP framework consists of four steps:
The Control Point You Pick Matters
The control point is the most important system, the last to be thrown out before an owner ceases operations.
Respondents that started with POS, CRM, and Practice Management control points have the highest median attach rate for their second products.
Explore Which Expansion Products Offer The Greatest Returns
Understanding where to expand remains one of the hardest transitions for a software company to make. You can download the report below to see the data for the 5 products that drive the most incremental Average Revenue per Account (ARPA).
Download the full report to see a breakdown of the top expansion products by incremental ARPA driven.
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Don’t Miss Our Data-Rich Deep Dives Into Fintech and AI
The 2024 Vertical & SMB SaaS Benchmark Report features two product deep dives (one on fintech and one on AI). Respondents are rapidly building both AI and fintech products, and you can find the detail on how they are doing it.
Sizing The Potential of Fintech Products
Nearly 40% of respondents offered a fintech product. Fintech products can address key merchant needs while driving ARPA for Vertical SaaS Vendors. For the survey respondents, Payments at 30% was by far the most common fintech expansion product. This was followed by Lending at 11% and Payroll at 9%.
Understanding AI’s Pervasiveness and Monetization
Our research finds that 31% of respondents have an AI product in the market, and 39% plan to launch one in the next year or so.
AI is currently most prominent in the Back Office and Commerce/Front Office functions.
Read the full report for more fintech product insights, inducing payment take rate quartiles, the impact of making payments mandatory, and much more!
If you’re a Vertical SaaS leader looking for a more customized consultation where we can guide you through our proprietary data and tailor it to your business priorities and key questions, you can reach out to knowledge@tidemarkcap.com.
Thanks for Being Here!
Tidemark was founded on a simple premise: if we build an incredible community around ourselves and do right by them, we’ll earn the right to invest in the handful of companies that raise each year and (hopefully) create one hell of an investment firm along the way.
If this essay was valuable to you, please help us grow our community. We’d love for you to introduce us to the next generation of builders who should be part of this. You can email us at knowledge@tidemarkcap.com with your intros!
Tidemark is a growth equity firm purpose-built to help emerging category leaders scale and win. We also give 10% of our carried interest to the Tidemark 10 Foundation to support sustainability, Mainstreet empowerment, and mental health.
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