Over the past few months I’ve talked to a number of entrepreneurs with vertical, niche Software-as-a-Service (SaaS) products. As expected, mainstream SaaS platforms are being carved up into small, specialized point solutions, while also providing a better experience to their customers. Most venture investors are looking for large, platform-like SaaS startups, but more entrepreneurs are going to build sustainable SaaS products that aren’t venture backable, yet very successful.
Here are a few thoughts on more vertical, niche SaaS startups:
- SaaS, with strong to recurring revenue, predictability, and renewal rates (hopefully!), makes for a sustainable business, even at limited scale
- Costs to develop and deploy software has continued to drop due to open source and the cloud, making it easier to get products to market and carve out a niche (scaling a business is still capital intensive)
- Depth of product functionality is going to be stronger the more narrow the market, and thus serve the customers’ needs better
- Marketing and sales prospecting is more straightforward with a focused market, especially messaging and talking points
Look for the SaaS cottage industry to continue to grow, especially as more more vertical, niche products reach a sustainable size.
What else? What are some other reasons there will be more vertical, niche SaaS startups?
David Cummings on Startups 
You just explained my business…
We are a lean team with a narrow focus. What we do, we do better than anyone in the world. But we are the furthest thing from an enterprise or platform offering.
I think you will see more of these offerings down the road because they are a win/win.
For the entrepreneur the wins are:
Creative freedom
More income
Freedom over your time, schedule
No more day job
For the client the wins are:
Getting something done in a more efficient way
Cheaper than solving this problem with an employee or employees
Don’t have to spend time thinking about the issue any more, it is someone else’s problem
On VCs…we have only had a few express interest.
I don’t feel a huge need for money at this point, so we have not pursued it.
We are already very profitable, our tech is in place, and our team is in place. We also have had enough money to spend on building out our next offering…which will end up being a new SaaS business.
I would love to see a Saas, that would really give us a better alternative to Quick books. They have a new product called “Quickbooks self employed” It would work great except it leaves out the more important part. Invoicing. A good online accounting platform for an independent, with the option to play nice with outlook or outlook.com. That would be something.
Sounds like a great idea! Huge opportunity. Why not tap into your network to see what others want/need, start documenting the base features needed, how much they would pay, and then find a developer to build your first version?