How To Invest in Vertical SaaS

Vertical SaaS is a recurring revenue business that focuses on a specific application or a narrow vertical sector.

By narrowing the scope of the target application, the startup can focus its efforts more effectively on solving the problem.

Here are some key points to consider in investing in a vertical SaaS play:

While the target application may be narrow, make sure the market is big enough to support a venture business.

A vertical SaaS business starts with a specific application to win a place in a customer’s business.

Once inside, the vertical SaaS seeks to take on additional applications.

Later, the vertical SaaS business can extend to other businesses connected to the customer.

The key to a vertical SaaS play is to have a control point in the business, such as the core customer data, or an efficient platform for managing applications, or a technology such as Artificial Intelligence.

Once established, the control point opens the door to other areas in the customers’ business. 

Investors should look for the control point to see how the vertical SaaS play will grow.

Vertical SaaS businesses require less capital to launch and scale.

This reduces the amount of funding the startup needs to raise.

Consider these steps in investing in a Vertical SaaS business.

 

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Disclaimer:
Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.