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Why Venture Capital Firms Invest in SaaS Management Tools

and where the missing link is for investors


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Theron McCollough

2 years ago | 2 min read

Over the last few years, SaaS has become a very profitable investment for venture capital firms. In 2019, $136.5B was invested in SaaS companies in the US alone. More and more SaaS companies have entered the market, disrupting current practices and helping customers streamline their businesses and eliminate manual processes.

First, SaaS businesses provide predictable, recurring revenue, a draw for any VC firm. The SaaS model also allows startups to grow their customer base for the same costs, more or less. In this way, SaaS startups are incredibly capital efficient.

Photo by Jack Sloop on Unsplash

Secondly, SaaS companies are easily scaleable. One study found that SaaS companies provided the most scaleups compared to all other sectors.

Amid the unpredictability and volatility of the COVID pandemic, SaaS companies have continued to thrive. One analyst described that “In many ways, 2020 has been the best year yet for SaaS — the very business model of SaaS lends itself well to uncertainty. Its flexibility has led to more IPOs, more revenue, and more interest in SaaS than ever.”

In a post from the Forbes Communications Council, SaaS revenue is projected to climb to $233 billion by 2022 and $369.4 billion by 2024. Spurred by the pandemic, scalable SaaS management tools that improve cost and time efficiency for businesses are in demand.

This is especially true of vertical SaaS solutions that solve specific pain points in a given sector. One analyst wrote that “COVID-19 is creating even more opportunity in the vertical SaaS space as businesses look for creative ways to deliver a better customer experience to drive revenue.”

However, even with all of the VC investments in SaaS management tools, there are very few tools for investors themselves.

Investors are left behind to cobble together various tools to fit their needs. Airtable does an ok job, but investors still need to reconcile with little automation. Zapier is a great tool to help connect the pieces, but no-code software only goes so far.

CRMs like Affinity do a good job at scratching the surface but leave investors frustrated and only work if you have a larger internal team. For most seed funds and sub-$100 million funds, the cost to run a Pitchbook plus Tableau product is way too expensive for the 2% operating fees the fund charges.

Fund performance and analytics on fiifi.co

We set out to create a solution that any nano, micro, or seed fund can use to save time, save money, and be more sophisticated and informed investors. fiifi is a quantitative portfolio management system that aggregates all of your information into one location, including syndicates, fund portfolio investments, Angel investments, LP investments, and SPVs.

We are approaching the old-school model of investing and managing a fund with spreadsheets, and evolving those into actionable automated tools for investors. Our advantage is the network we’ve built and the connections that we offer with our larger marketplace of investors. In addition to giving preferential rights, we leverage the network to source, manage, and benchmark deal flow.

In turn, we extend those cost savings to our customers. For example, we can cut the costs of something normally very expensive — like taxation, SPVs, and paralegal services — by running them through our SaaS model.

With our services, investors have the real-time tools they need to make informed decisions and manage their investments.

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