Software-as-a-Service (SaaS) has become integral to how businesses operate, and PartnerStack, a Toronto-based startup, has taken advantage of its explosion in the market.
While there are still opportunities for new SaaS companies to enter the ring, the market is getting crowded, and it’s a little harder for new SaaS companies to gain traction. The median growth rate of companies with $1 million to $2.5 million in annual recurring revenue decreased from 100 per cent to 64 per cent in just the last year, according to a study from OpenView. Additionally, SaaS companies report having nine competitors on average, up from just two in 2013.
After an ambitious plan to launch a new collaboration platform akin to Slack four years ago, which didn’t really go according to plan, says PartnerStack CEO and co-founder, Bryn Jones, it became clear the opportunities were going to come from elsewhere.
“We understood our collaboration platform software wasn’t the way to go. Success was actually found by enabling companies to get more distribution through a network of third party distributors,” Jones told CDN. “Partner and channel is the last fossil inside of SaaS companies. They’ve never had to go through it and seek third-party distribution, people have always come to them. But as you go to market, the cost to acquire customers has been increasing. It’s actually more efficient to go through a network of distributors to bring in new customers.”
PartnerStack works almost exclusively with SaaS companies that target small to medium business, and its customers include Intuit, Asana, Soundstripe and Freshworks. SaaS companies can create a fully customized channel program through PartnerStack, which is then managed automatically so they can focus on scaling their community and increasing sales. PartnerStack members gain access to features such as custom company pages, campaigns, referral links and rewards. The Toronto startup isn’t the first to build a business around this concept, but Jones says there’s a lot of money sitting on the table waiting for them, citing SaaS companies’ lack of resources and experience when it comes to the channel ecosystem.
“We know what works and what doesn’t,” he says.
Jones might be right. Revenue has quadrupled over the last year, and PartnerStack’s network of partnerships has grown from 25,000 to 150,000. Its team has also tripled, going from 10 to 28 employees, causing them to move to a larger office in Toronto. The company’s focus heading into 2019, according to Jones, will be the multi-cloud vendors.
“And then in 2020 and 2021, we’ll move into hardware,” says Jones. “But there’s such a hole in SaaS right now, and it’s the fastest growing segment of the cloud market so we’re going to continue to double down on it.