What We Learned from Analyzing 2000+ Series A fundings in H1 of 2022

SaaS

Our goal with this research was to better understand the SaaS landscape by analyzing the behavior and characteristics of modern, funded companies. Our mission was to answer some of the popular questions that are asked regarding the go-to-market methods of recently developed apps.

Here’s what we did:

  1. We used Crunchbase public data and filtered only companies that had announced their Series A funding rounds in the first half of 2022. 
  2. From these companies, we selected only companies that in total raised between $1M-$150M.
  3. From this set, we manually filtered out companies that are not offering a product, e.g. venture capitalists, software-development shops, etc.
  4. That left us with 2006 companies that raised their series A funding rounds in H1’22 and in total raised between $1-$150M.
  5. Then, one by one, our dedicated market research team went through those 2006 companies and segmented them into B2B or B2C segments. A company would be classified as a B2B if it sells a product to businesses rather than to consumers directly. Our team explored their website, social media channels, press releases, founder interviews, and other publications to make sure the classification is accurate.
  6. For the B2B companies, we zoomed in and analyzed additional parameters around the go-to-market, pricing, and user onboarding characteristics.

Some of the main discoveries from our research:

Discovery 1 – B2B is Thriving

1,418 companies out of those examined (total of 2006) have a B2B model in place, i.e. they are selling to businesses. Out of those 1,418, only 27 are both B2B and B2C. The fact that B2B is thriving was not a surprise for us but to see that more than 70% of the funding rounds are in the B2B space, was an interesting finding. 

Analyzing the Industry Groups that those companies are associated with, we can see a clear trend toward Data and Healthcare related companies:

Data and Analytics32923.20%
Healthcare28319.96%
AI23216.36%
Fintech19914.03%
Cyber Security845.92%
Developer tools/platforms453.17%
Education312.19%
Non of the above58941.54%

CrunchBase classification of the 1418 B2B companies examined. Notice that a
company could be classified within two or more of the industry groups stated above.

Location wise we found that, unsurprisingly, the country where the most companies are headquartered is still the US (620 companies), although the majority of companies, consisting of 798, were actually outside of the US, mainly in Asia (337) and Europe (307).

Discovery 2 – Self-Service is Adopted Early-on

As a platform that provides user management capabilities to SaaS companies, it was interesting for us to find out whether early-stage companies choose to open up their product to anyone who wishes to explore. 

Given the rise in popularity of Product-led Growth (PLG), we anticipated the adoption of Self-Service user registration. Still, seeing that 245 Series A stage companies were offering self-serve sign-up, which was more than 17% percent of all B2B analyzed, was surprising. It’s worth noting that during the last two years, series A funding started to happen at a much earlier stage of a company’s lifecycle. Hence some companies are still reluctant to open for self-service just a short time after their stable product launch.

This finding was a welcome surprise and we expect the numbers to go even higher in the coming years.

What about the other companies? Well, 478 of them — a third of the companies analyzed, offer a traditional “book a demo” button. Intrestingly, 103 companies offer a demo while also allowing self-service signup.

A bonus fact is that 82 (5.78%) of the companies examined also offer a social single-sign-on (SSO) to their products.

Discovery 3 – Public Pricing is Not That Common at an Early Stage

We’re getting more used to transparent pricing from the services we evaluate. Thus, we would think that most companies would reveal their pricing models publicly at almost all times. Surprisingly, we found out that this is still not the case. In fact, only 215 (15.16%) of the B2B companies examined had a tiered pricing page on their website.

Discovery 4 – Freemium or Trial Models are Not as Common as Expected

A lot of recent research and discussions are centered around the question of which way a modern product should go: Freemium or Trial. In our research, we found that only 183 (12.91%) companies offer either of them publicly on their website. 91 (6.42%) offer a freemium version of their product and 124 (8.74%) offer a limited trial, while only 32 (2.26%) offer a mix of both.

Although this might look like a low number, most of the companies that had a tiered pricing page (208 as presented above) offer a freemium or trial as part of it (183 out of the 215, which is 85%).

Additionally, we found that 41 (2.89%) companies have an open-source offering of one of their products or a relevant open-source contribution to their space.

Discovery 5 – Not Enough to Show for Enterprise-Readiness

Companies are often inclined to offer some sort of custom tier on their pricing page aimed at enterprises that need advanced capabilities (e.g. enterprise Single-Sign-On (SSO), audit logs, advanced roles & permissions, SLA, etc). In our research, we found that 120 (8.46%) of the examined B2B companies had an enterprise tier on their pricing page. While this is not a high number, given the fact that most of the companies did not have a pricing page at all, this actually represents the majority (120 out of 215 – 55.8%) of companies that did present their pricing on their website.

Conclusion: What we’ve learned from analyzing more than 2000 Series A funded companies in the first half of 2022

There are more interesting topics to explore but the research we did so far includes very interesting insights about the industry. We’ll try to summarize a few points:

  1. B2B is by far the most popular business model adopted these days.
  2. Companies at early stages are already inclined to open up their products for self-serve signup and authentication.
  3. Companies are still reluctant to expose and commit to their pricing publicly and hence are leaving the pricing discussions to the demo calls.
  4. Some companies offer a trial or a free version of their products, but the number is still quite low relative to the discussions around it in the industry.
  5. Most of the companies that open up their pricing will include an enterprise tier as well, leaving an option for an ad hoc upsell on enterprise-readiness capabilities.
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