The Roaring 2020’s: How the SaaS industry is set to explode

As venture capital investors, it is our job to constantly be in contact with founders: innovative people, who are experimenting with new business models, working on bleeding edge technologies, and attempting to solve the world's most difficult problems.

This is particularly true in SaaS, where companies are being built that have the potential to transform industries and revolutionise working practices. That's why we recently brought together a group of SaaS founders from our global portfolio and discussed the following insights.

1. The 2020s will be the roaring 20s for SaaS companies

Large companies are adopting new tools at a much quicker pace than before, driven by the pandemic and remote work. What used to take two years, is now taking less than two months. Large organizations - the majority of whose employees are now millennials - are finally trusting the cloud for its most sensitive datasets, opening up new opportunities for SaaS companies.

2. AI is becoming real, and useful

AI has been a talking point for some time, but its application to our day-to-day is now becoming less abstract and more 'real' and tangible. One area is customer support where AI plays an important role in humanizing automated conversations in chatbots and other channels. Another area is within CRM and other sales tools where the use of AI allows teams to work much more efficiently. The development of GPT3, created by OpenAI, provides human-like text and will have a big impact in many areas where companies interact with customers.

3. The consumerization of software continues, and now it's getting personalized

Software is becoming increasingly consumerized. Startups are building for, and selling directly to, the end-user instead of building products for large IT- and procurement departments. With the volume, velocity and variety of data continually growing, it's now easier than ever to personalize products to serve customer needs.

4. APIs open the doors between large organizations and startups

Large corporations are increasingly making their APIs available to startups, fostering a more collaborative and inclusive environment where the startups have easier access and the corporations have more exposure to innovation.

5. Niche markets provide huge opportunities

The increasing digitisation of our daily lives is opening up new opportunities and markets that were previously regarded as too niche for many venture capitalists. Vertical SaaS companies with products focusing on a particular industry have seen a big growth during 2020 and it will continue this year.

6. No-code tools makes everyone a builder

The popularity of no-code and low-code tools continues to increase, allowing any employee or creator to build workflows, automate processes or create apps without writing a line of code. For founders of SaaS companies, it makes it easier to get started and to test ideas much faster than before.

7. Alternative financing for SaaS companies

Unlike startups in other sectors, many SaaS companies have revenue at a very early stage. The predicted revenue model of SaaS has created an emerging trend of alternative financing models. Pipe, or Antler portfolio companies ARRSquared and Supafin are some examples. SaaS startups have more options today beyond fundraising from traditional venture capitalists.

This article is based on the Antler circles industry discussions led by the founders of Antler's portfolio companies, external industry leaders and investors.

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