Workhorse Capital | We are SaaS Investors

Workhorse Capital – We are SaaS Investors

We are long-time and active investors in software as a service (SaaS) businesses – one of the core categories within our technology-enabled services investment focus. Software businesses of all types – spanning horizontal and vertical market segments – have rapidly embraced the “as a service” delivery model as customer demand has shifted away from legacy, on-premise value-delivery models to SaaS. Business and individual consumers of software technology increasingly prefer SaaS-based delivery of the applications that power their business because of the capital efficiency, operational simplicity, speed to benefit, flexibility and integration and accessibility of SaaS delivered applications. Everything, including software, is turning into a service.

Why Investors Like SaaS

Investors are attracted to SaaS investments for their compelling value-creating attributes:

Recurring Revenue Model
The recurring nature of the revenue models deployed by tech-enabled services businesses translate into a high degree of predictability and scalability.
Operating Leverage
Because the primary input into tech-enabled services is technology (rather than labor), tech-enabled businesses enjoy gross margins between 60 and 90 percent.
Operational Scalability
Technology-enabled services business have the ability to scale to become significant in size, due in large part to the fact that they serve customers from a shared and relatively homogeneous infrastructure.
Expansion Opportunities
SaaS businesses are often able to expand into adjacent markets by adding additional products and services that complement a core product offering. Adjacent market opportunities add potential growth opportunities for an already highly scalable and attractive business model.

With inexpensive access to cloud computing and other on-demand resources, SaaS businesses are more capital efficient to start than ever. We see more and more bootstrapped and non-venture-backed SaaS businesses that reach minimum viable scale as a results. We admire entrepreneurs who bootstrap their SaaS business.

Scaling a SaaS Business

SaaS businesses are more capital efficient to start than ever. But, experience tells us that SaaS businesses which have the opportunity to grow quickly don’t remain capital efficient for very long. With a customer payback period from six to eighteen months, SaaS businesses are “customer acquisition cost” intensive. After achieving initial market success, SaaS businesses require capital to fuel customer acquisition and revenue growth.

We appreciate the unique scaling and economic attributes of SaaS businesses and strive to deeply understand the key levers that enable these businesses to grow and prosper. We are purpose built to help SaaS entrepreneurs achieve their objectives. You can read more about our thoughts on the Big 3 Scaling Imperatives in SaaS businesses on the Workhorse Capital Blog.

How to Find SaaS Investors for Your Business

There are many good SaaS investors which invest at different stages of the business development life-cycle. If you would like to identify growth stage SaaS investors which may be a good fit for your business, we encourage you to review the list of growth stage investors (including SaaS investors) on The Growth Equity Blog.

Of course, we also encourage you to contact Derek Pilling or Dave McLean at Workhorse Capital if your SaaS business is ready for growth equity and meets our investment criteria.