When we speak about the cloud and enterprise software market globally, we think of an upward trend.
And one is not wrong to think so?
B2B SaaS lead generation and software comparison platform, Crozdesk’s SaaS and Cloud startup report 2018, states that the public cloud market is expected to grow by 20 percent, while the Software-as-a-Service (SaaS) market is expected to grow by 22 percent in 2018.
However, SaaS investments have grown only by four percent in 2017. The categories that attracted the most funding being Accounting & Finance and Business Intelligence/Analytics, according to the report.
Slowdown in SaaS funding
But funding in SaaS growth has rather slowed down globally. According to Crozdesk’s projections, there has been an 8.6 percent increase in funding in 2016 as opposed to only a 4.6 percent increase in 2017.
Crozdesk says that this growth will slow further to 3.5 percent in 2018.
With 63 percent of companies and 89 percent of the total funding coming from United States; it continues to remain one of the strongest markets for cloud and software sectors.
Further, the Silicon Valley houses 16 percent of the world’s cloud and software companies and 39 percent of the global funding in the sector generating from this area.
Looking at the global SaaS funding from Q1 to Q3, 2017; the sector was flushed with $50.25 billion funding.
Accounting and Finance software companies received the most funding over this time period of a total of $5.1 billion. This could be owing to the substantial growth of the fintech sector in 2017.
Business Intelligence, Analytics and Performance saw the second highest performing in terms of funding received garnering close to $3.3 billion, fueled by Machine Learning and AI technologies. Third place went to video-related products, which received $1.5 billion in funding over the period, fueled by the Augmented and Virtual Reality trends.
The biggest clusters for SaaS
Crozdesk analysis has found that in 2017, 62.79 percent of relevant companies worldwide were located in North America (United States 59.57 percent, Canada 3.22 percent).
Europe followed with 22.28 percent of worldwide records.
For this, Crozdesk team analysed 19,188 operating SaaS, PaaS, IaaS, and enterprise software companies, as well as 20,883 funding rounds to determine statistically relevant patterns of regional development.
Outside North America and Europe, Israel through its hub, Tel Aviv, has shown significant traction in SaaS development, according to the report. With 1.93 percent of the total relevant companies coming from Israel.
While, on the other end, Bengaluru and New Delhi have a total of 0.95 percent and 0.78 percent of the total companies in cloud and enterprise operations.
Speaking on the funding front, while Silicon Valley garnered has 38.68 percent of the total funding, Bengaluru and New Delhi stood at 0.35 percent and 0.12 percent.
You can access the full report here.
(Graphics by Aditya Ranade)