Why Not Conforming to SaaS Start-Up Stereotypes Could be a Winning Strategy

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In its third annual Expansion SaaS Benchmarks survey at the end of last year, OpenView made some interesting observations about SaaS companies and how unorthodox some of the more successful ones were. In its survey of more 500 SaaS start-ups, those that didn’t necessarily conform to the industry’s stereotypes saw higher growth, had more conservative burn rates and required less capital.

If you’re a SaaS start-up, how do you stack up in terms of industry norms? If you don’t conform to the profile of a conventional start-up, then maybe you’ll also achieve more.

Here’s how the survey’s findings show that SaaS companies are breaking the start-up mould.

Experience

We’re used to hearing the stories of tech founders who drop out of university because they’ve had that “big idea”, turned it into a world-beating global business and have reaped the IPO rewards by becoming a billionaire before they’re out of their 20s.

Well it seems that these stories are the stuff of fantasy in the SaaS world. According to the study, founders of SaaS businesses aged over 30 were running more successful companies. On average, they see 50% higher growth and 45% lower monthly cash burn than those under 30.

It appears that experience matters when it comes to running a technology SaaS start-up. Having that extra time to gain the knowledge and confidence it takes to run a successful business makes all the difference.

Location

Whether it’s in Silicon Valley or Silicon Roundabout, you might expect to find the “typical” technology start-ups in the world’s best-known technology hubs.

The Old Street area in London – Silicon Roundabout – saw more private equity investment in the first half of 2017 than any other tech hub in Europe. And the Bay Area in San Francisco is renowned for being able to attract amazing talent thanks to its reputation as being home to some of the world’s largest and best-known tech companies.

But it seems that locating in these tech hubs will not guarantee you success. The survey found that companies that set up in these sorts of high-cost areas aren’t as successful. Their businesses burn 133% more cash than their peers in lower cost regions. And those start-ups in low-cost regions grow 20% faster and realise 20-30% greater efficiencies of scale than those in tech hubs.

As remote working has become an accepted way for companies to operate – particularly so after COVID-19 – this is a welcome finding for any company that needs to save money on high rents and expensive talent. When your staff can work from anywhere, you don’t have to rely on being based in a certain area to attract the right talent.

Gender

Across the world, men dominate in positions of power and responsibility. But Beyoncé knew the score: girls run the world. The OpenView study backs this up, showing that women-dominated operations outclass their majority-male counterparts when it comes to business success in SaaS start-ups.

SaaS companies with leadership teams that were more than half comprised of women grew 15% faster than those dominated by men. Plus, these female-driven companies are growing more despite raising 50% less capital through funding than their male-dominated equivalents.

Despite this evident success, these companies are surprisingly rare. Out of the more than 500 survey participants, only 14% had equal numbers of men and women on the leadership team and more than half had no women on their boards at all.

Do you Conform to the Stereotype?

So, what’s the leadership profile of your start-up? Are you a bunch of 20-something university drop-outs based in offices in East London? Or are you running a gender diverse leadership team that has solid business experience and is managing a truly remote and global workforce?

Maybe our understanding of the “stereotypical” characteristics of a tech start-up founder are a little extreme. But if your team does conform to something like that persona, it could be time to rethink. As the study shows, location, age and gender matter. And, if you want to appeal to potential investors, going against the grain can pay off.
At NoBlue, we have lots of experience with start-ups in the SaaS space. For a free business consultation, book an appointment now or contact us today.

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Eva Caballero
NoBlue
[email protected]

(+34) 660 10 87 20
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