Diving into 50 of the largest SaaS companies in the world, we gathered insights around the median time to IPO, the length of time founders remain in executive positions and top locations for starting a SaaS business. How many boxes does your SaaS business tick?
Over the past decade, SaaS has become a ubiquitous tool in enterprise operations, creating the opportunity for B2B solutions springing up all over the world. Since the early days of the industry when giants like DocuSign, NetUpdate and Microsoft were making their debuts as companies, the SaaS space has become a key area for IPOs and billion-dollar companies. Adyen, DocuSign, Dropbox, and Spotify, to name a few, are all recent examples of companies built from the ground up and which became integral to the lives of their customers.
A majority of the top SaaS companies to IPO came from the West Coast of the United States, which comes as little surprise to anyone. However, startup activity in Europe (see Spotify and Adyen IPOs) should not be discounted. Indeed, hundreds of European SaaS startups are taking advantage of the innovative climate in the EU and will likely prove to be a region replete with such tech ventures.
While most founders tend to stay on as an executive in their company for 10 years or more, there are the gregarious few who build, set up, and exit soon after. Among these, executives for Qualys, Coupa Software and Talend stand out as some of the fastest founder exits to the business (just 2, 3 and 4 years, respectively) while more widely-known companies like Xero, Zendesk, Twilio, MuleSoft and LogMeIn waited until the 10-15 year range to exit the business.
Notably, some of the larger SaaS businesses that come to mind when we envision what B2B SaaS really means took their time filing for IPO onto the public markets. In the first half of 2018 alone, we saw DropBox, Spotify, DocuSign and MuleSoft throw their hats in the ring to quite a bit of success. While there are quite a few SaaS businesses which IPOd rather quickly (see below), it is not always the most strategic move to IPO as fast as possible. Where Salesforce made their debut on the stock exchange after 5 years, DocuSign took a more conservative approach and spent 15 years building it into the business it is today, with the most recent four years spent practicing for being a public company.
It is certainly interesting to look at the breakdown of SaaS companies by stats, get a sense of how the industry has trended over the last pivotal decade and understand movements by key founders in the space. One of the most compelling aspects of the model, however, is the fluidity with which it allows businesses to scale, and to what end, too. If Tom Gonser had not recognized that DocuSign had the potential to become a SaaS repository for signature communications, and had left it as an end-to-end relay tool, the company may have IPOd 7 years sooner—or it may have failed. There is no one size fits all roadmap to success in SaaS—though there are certainly best practices which will help them get there—and one of the more exciting prospects for the future of the industry is the range of possibility in which successful SaaS companies may live.
Ismael is an Editor at SaaS Mag and CEO of FE International, the leading M&A advisory firm for online businesses. Ismael has overseen the sale of hundreds of millions in online businesses, including the sale of the popular accounting software, Less Accounting, and the acquisition of Drip by Leadpages. He is also an active investor in SaaS businesses, sits on the board of numerous exciting SaaS start-ups, including MageMail and MRR Media and is and a member of the Forbes Finance Council. Ismael’s previous background was in large-cap M&A investment banking, where he executed several high profile public deals namely in the Technology sector.