Canada - The Land of SaaS?

by Boris Wertz | Business

When Bessemer Venture Partners recently published their map of major cloud players, I was surprised to see so many Canadian companies on there.

Shopify, TribeHR, Unbounce, Clio, Hootsuite, Radian6 and Freshbooks made the list and a few others (like Wave Accounting) probably should have been on there as well.

So why are Canadian companies so much better represented in SaaS than in consumer internet?

I see two main reasons:

  • SaaS companies (like e-commerce companies) have a much easier time to monetize their product than most consumer internet plays as monetization doesn’t depend on scale like every ad driven monetization. This means that those companies require way less funding and most of them can be built on smaller seed and angel rounds which is ideal for the sometimes restrictive funding environment we face in Canada. Unbounce, a company I recently invested in, even bootstrapped their business to thousands of paying customers before they took funding to scale their business.
  • The second reason is linked to sales & marketing. Traditionally, purchasing decisions for enterprise software were driven by IT departments which translates into a lengthly and costly sales process favouring those software companies that have the strongest relationships into the decision makers at the buyer. Geographical proximity plays a large role in building those relationships which in turn makes it very hard to build large enterprise software companies outside of the Silicon Valley. SaaS starts to remove IT from the purchasing process, meaning the user and the buyer are, increasingly, the same person – the product quality is now much more important than relationships and the chances of building a big SaaS company anywhere in the world have increased dramatically.
I am very bullish on SaaS and I am especially bullish on SaaS coming out of Canada – and in 2011 I put my money were my mouth is and invested 4 Canadian SaaS companies (GoInstant, Silkstart, Unbounce, one not yet announced).
W Media Ventures
Vancouver, British Columbia, Canada

W Media Ventures is a Vancouver-based venture capital firm focusing on Consumer Internet opportunities in the Pacific Northwest and Western Canada. We are looking for entrepreneurs that want to build remarkable companies in the fields of digital media, e-commerce, social networks or platforms. Having founded and run Internet companies ourselves, we not only understand the space but also the... more

blog comments powered by Disqus

Boris Wertz

Boris Wertz

Boris Wertz is one of the top tech early-stage investors in North America and the founding partner of Version One.  He is also a board partner with Andreessen Horowitz. Before becoming an investor, Boris was the Chief Operating Officer of which sold to Amazon in 2008. He was responsible for marketing, business development, product, customer service and international operations –... more

Who's Hiring

Recent Comments

Powered by Disqus