B2B Software Leadership Dinner: Software leaders call for greater alignment as sector grows
There is significant capital for growth-stage business-to-business (B2B) SaaS and software companies, but early-stage fundraising is more challenging; subscription is the preferred revenue model, but perpetual licenses are still used in certain settings; “SaaS businesses” can differ in revenue models, delivery models, payment terms depending on their geographical and vertical reference market.
These were the conclusions drawn from the latest B2B Software Leadership Dinner in London.
The dinner took place on Wednesday 6 February and featured 20 senior executive and board members from the software and Software-as-a-Service (SaaS) sector. It was hosted by Silverpeak, the technology investment bank, Spectrum, the retained executive search and HR consulting firm for the technology sector, and technology law firm Wiggin.
“It was a wonderful dinner with the participation of 20 great executives & directors,” said Pietro Strada, Managing Partner at Silverpeak. “I think it demonstrates the quality and maturity of the software and SaaS sectors in Europe: it is clearly a very healthy and strong market.”
While the evening took place under Chatham House rules, some key points of discussion have been released.
Attendees agreed that while there is significant capital available for growth-stage B2B software companies, it was generally considered to be more difficult to secure early stage fundraising.
Furthermore, there are some major national and sectoral differences with regards to the adoption of SaaS vs. perpetual licenses, and in some cases, SaaS can represent different things to different people.
For some, it is closely affiliated with a company’s revenue model (subscription) or payment terms (annually/quarterly/monthly in advance), while for others it is about delivery (multi-tenant single-instance) and cloud hosting. For companies in certain sectors, e.g. financial services, SaaS may raise concerns about data capture and storage costs connected with these software services.
Given these various points of differentiation, the business leaders present at the dinner agreed that more needs to be done to communicate the characteristics and benefits of SaaS.
Ultimately the key success metric for B2B SaaS companies is customer adoption and utilisation, which requires the key implementation departments in the company to be aligned. It also requires SaaS providers to follow good business disciplines, such as understanding their clients’ needs and having a product that addresses them.
The group also agreed that whilst there are some common key performance indicators (KPIs) of SaaS companies, such as LTV or CAC or churn, the way in which they are calculated can vary. Senior managers should able to calculate them and present them into the context of their own businesses.
Silverpeak director David Bell revealed that some lively discussions took place among attendees, which is further evidence of the dynamic nature of the sector.
“We had a wide ranging-discussion, touching on the commercial, operational and financial insights of and challenges for B2B software businesses in diverse verticals and differing stages of maturity,” said Bell. “And somewhat surprisingly there were even some impromptu contractual negotiations taking place in the room.”