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Software subscriptions are eating the world: Solving billing and cash flow woes simultaneously

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Although recurring revenue businesses have been around for a long time, the trend toward a subscription economy has escalated rapidly in the last few years. IDC expects that by 2022, 53% of all software revenue will be purchased with a subscription model. Even the car subscription market is set to grow by 71% by 2022.

Many types of businesses are looking for ways to earn recurring revenue — and it has gone beyond business-to-consumer companies like Netflix and Dollar Shave Club. Business-to-business companies are also joining in, even those with products that last a long time. For instance, elevator-maker Otis offers Otis ONE, a subscription-connected elevator solution that offers predictive maintenance insights.

Subscription billing options should make it easy to manage all types of subscriptions, including integrating analytics to provide a more complete picture of the subscriptions landscape.

Promising, but there are pitfalls

Subscription business models are attractive, but there are two major pitfalls. At the top of the list is payment. Regardless of company size, there’s an ongoing need to convince customers to sign up long term.

Companies also need to accommodate new payment methods and ensure ongoing compliance with interstate and international tax laws. As a result, the payment process can quickly become painful.

As any company with recurring revenue scales, it becomes increasingly challenging to manage subscriptions, especially with homegrown systems, changing subscription offers and the complexities of converting customers from free trials to paid subscriptions. Subscription billing options should make it easy to manage all types of subscriptions, including integrating analytics to provide a more complete picture of the subscriptions landscape.

Businesses also have to keep in mind that every time they add more product categories or expand into new geographies, they need to tack on extra software code to change their operations and stay sales-tax-compliant. As they expand globally, this can become an obstacle to rapid growth and flexibility.

To keep the company focused and maintain growth without having to expend resources, subscription businesses need a specialized billing system so they can focus on customer acquisition and revenue growth rather than staying on top of billing complexity.

The CAC payback gap constrains growth

The second issue: How do businesses cover the funding gap between when customers sign up and when they pay? In the subscription economy, companies that would previously receive a customer’s payments all at once now earn revenue spread across a monthly or quarterly subscription fee.

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://techcrunch.com/2021/05/13/software-subscriptions-are-eating-the-world-solving-billing-and-cash-flow-woes-simultaneously/

Crowdfunding

London’s DNA Payments Group Enters £100M Deal with Alchemy Partners

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London-based DNA Payments Group, the fast-growing “vertically integrated” payments firm, has entered a £100 million deal with Alchemy Partners (Alchemy).

With an operations based hub in Kent, DNA presently serves more than 45,000 merchants including established online and offline retailers to SMEs, offering them with  70,000+ terminals which make “over 20 million transactions worth over £600m a month.”

As mentioned in a release, DNA is one of just a few players in the United Kingdom and Europe with fully Cloud enabled omni-channel payment processing capabilities, and also “provides a variety of SaaS and PaaS solutions to major global acquirers and payment schemes.”

The investment by Alchemy “sees DNA well positioned to benefit from the strong market opportunity, with the UK beginning to see signs of a recovery from the Covid-19 pandemic,” the announcement noted.

Arif Babayev and Nurlan Zhagiparov, the founders of DNA, stated:

“Alchemy’s investment marks a historic day for DNA and is a huge endorsement of our company and our technology. We have been looking for the right partner with the right ethos, vision and experience and we are lucky to have found this partnership with Alchemy.”

The past year has been quite challenging for businesses, and at DNA they have been “fully dedicated to helping [their] customers manage through the pandemic,” the firm’s management noted while adding that during the last few months DNA has expanded its digital commerce solutions and payment methods, “providing merchants with Pay by Link, Checkout v3, ApplePay, Pay by Bank, PayPal, Open Banking and many other new capabilities.”

As noted in the update:

“This transaction will allow us to accelerate our growth, helping more merchants accept payments quickly and easily, both in-store and online. Our technology and vertical integration give us an unparalleled advantage in servicing our partners and customers, but also provide a great foundation for bolt-on acquisitions.”

This investment will allow us to further improve our product offering and continue with our business strategy of making key acquisitions to grow our presence “not only in the UK but also internationally,” the firm’s management added while pointing out that they have “more than doubled [their] estate size and turnover in the past 18 months.”

Toby Westcott, Partner at Alchemy Partners, remarked:

“We are delighted to be partnering with DNA. Alchemy is always looking for opportunities to partner with talented business founders and uncover attractive investments that others may not be able to access.”

Wescott also mentioned:

“We are focused on helping companies grow and develop, and having worked closely with both Arif and Nurlan during this extraordinary period caused by the Covid 19 pandemic, it was clear that DNA and Alchemy’s goals, missions and values were closely aligned. Merchants’ increasing need for omni-channel payments solutions combined with the strength of DNA’s product proposition creates a compelling investment opportunity and we are excited to join DNA on its journey to build a leading payments business in the UK and expand into Europe.”

DNA Payments was advised by Proskauer, Houlihan Lokey and EY and Alchemy was advised by Macfarlanes and PwC on this transaction.

Launched in 1997, Alchemy aims to target key opportunities across Europe to team up with and work with management teams, assisting them with creating value by addressing problems, helping “take difficult decisions and driving through change.”

Since introducing its services, Alchemy has finalized more than 190 transactions, investing  £4 billion+ into firms and organizations based in 14 different countries.

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://www.crowdfundinsider.com/2021/06/176583-londons-dna-payments-group-enters-100m-deal-with-alchemy-partners/

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SaaS

Anrok raises $4.3M to solve sales tax for SaaS companies

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It’s easier than ever to build a product and sell it around the United States, or the world. But if you want to do so without incurring the wrath of any particular state, or nation-state, you’d best have your tax matters in order. This is why Stripe’s news last week that it has built tax-focused tooling to help its customers manage their state bills mattered.

But for SaaS companies, things can be more complicated from a tax perspective. That’s what Anrok, a startup working to build sales tax software for SaaS firms, told TechCrunch.

The company’s CEO, Michelle Valentine, said that modern software companies need specialized help. And her startup is announcing a $4.3 million fundraise today to back its efforts. The capital event was led by Sequoia and Index, the latter firm a place where Valentine used to work.

Anrok delivers its service via an API, and charges based on the total dollar value of sales that it helps a customer manage. Its percentage-fee falls with volume, and you can’t pay more than 0.19% of managed revenue, so it’s pretty cheap regardless, given how strong software gross margins tend to be.

The Anrok founding team: Michelle Valentine, and Kannan Goundan. Via the company.

Valentine said that there are three things that make SaaS tax issues more complex than other products. The first deals with addresses. Software companies have to pay sales tax where customers are located, and often only have partial information. Anrok will help with that problem. The CEO also said that variable SaaS billing makes charging the right amount of tax an interesting issue, and that states have tax laws specifically aimed at the software market that must be navigated.

So, a more mass-market solution might not be the best fit for SaaS companies looking to avoid both trouble with states and the work of handling tax matters themselves.

It’s not hard to see why Anrok was able to raise capital. The company is early-stage with its first customers onboarded, so it’s not posting the sort of revenue growth that investors covet at the later stages. What then were its more fetching attributes? From our perspective, on-demand pricing and a simply gigantic market.

Sure, Anrok is serving SaaS businesses, but it’s doing so using what could be described as a post-SaaS business model; on-demand, or usage-based pricing is an increasingly popular way to charge for software products today, putting Anrok closer to the cutting edge in business-model terms. And the company’s market is essentially every software business out there. That’s a lot of TAM to carve into, something that investors love to see.

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://techcrunch.com/2021/06/14/anrok-raises-4-3m-to-solve-sales-tax-for-saas-companies/

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SaaS

You Can’t Sponsor Dreamforce. So You Should Sponsor SaaStr Annual 2021 in September!

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Dreamforce has followed SaaStr Annual as the second major Cloud event to come back.  Dreamforce will be the week before 2021 Annual, and capped at 5k attendees.  Tickets will be very hard to come by and most companies will not be able to formally sponsor the event this year.

So what to do if you want to engage with 5,000+ founders and Cloud execs this year?  Sponsor 2021 SaaStr Annual!

More details here.

Booth selection is already underway so HURRY up and sponsor ASAP!

Published on June 11, 2021

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://www.saastr.com/you-cant-sponsor-dreamforce-so-you-should-sponsor-saastr-annual-2021-in-september/

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SaaS

The 7 Ways Prospects Choose One Vendor Over Another

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There’s a basic set of criteria most buyers look for. And breaking them down also shows us where the openings are for new entrants:

  • Most trusted brand. In the end, 80%+ of buyers are going to pick the most trusted or one of the most trusted brands in the space. This is not irrational. Most of us don’t have the time or often the skills to truly decide which vendor is best. Brands are proxies for quality and trust. Imperfect proxies for sure. But proxies.
  • The one specific vendor with that key 10x feature. This is how some startups break into a space. Sometimes, a new entrant may be feature-poor and relatively new — but it has a new take on a space and has a new critical “10x” feature for you that no leading vendor has. A customer will often pick a new vendor if it has a critical integration, a critical workflow, a critical dashboard, etc. that the established leaders don’t.  More on the 10x feature here.
  • Far better performance etc. A version really of the “10x feature”, but sometimes a specific vendor will have far better performance for a certain use case. Algolia search, for example, is 10x or more faster for certain types of search — but not all. Datadog also won here in part by making it far easier to monitor and manage all the critical parts of your application stack.
  • The one that is far easier to deploy. We don’t all have time to deploy Salesforce. Pipedrive could be deployed in minutes. That led to a $1.5B exit.
  • Cheaper (sometimes). It’s hard to build something big just because it’s cheaper. SaaS isn’t a commodity, not really. Every vendor is different. But once a market leader starts to go upmarket and get more expensive, that does leave a lot of room at the bottom. Often for several unicorns. More on that here.
  • The most enterprise vendor. Sometimes, the market leaders aren’t enterprise-focused. This can create a niche for a more secure, more trusted, more workflow-ed vendor in the space.  A related post here.
  • A vendor tailored just for your vertical. Vertical SaaS is booming. Why? Having a CRM, an ERP, a marketing automation solution tailored to your industry can be super helpful. Veeva is a great example, with 1,000+ customers for CRM and vault products for healthcare.

Which are you?

And a related post here:

5 Ways to Enter a Crowded Market. And 3+ Ways Not To.

Published on June 11, 2021

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://www.saastr.com/the-7-ways-prospects-choose-a-specific-vendor/

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