#066: 70 vSaaS Growth Equity Funds, Industry Specific App Stores, Payments Hack

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Apr 01, 2024

York IE X Luke Sophinos Growth Equity 70 List

YorkIE and I just dropped the Growth Equity SEVENTY List

70 firms, actively investing in vSaaS companies at the growth stage.

If you're a founder/operator don't miss it (I sure wish I had it a few years ago). 👇

Growth Equity LOVES Vertical SaaS IE Cloud based software solutions designed specifically to serve the needs of a particular industry or niche market.

Vertical SaaS is tailored to address the unique requirements, workflows, and challenges of specific sectors.

Some great companies have been built only targeting only one industry:

In fact I've broken down nearly 100 of them over at lukesophinos dot com...

While there has been an influx of angel and VC capital at the earliest stages of vertical software startups, as they grow in size, these companies are also attracting larger and later stage funds with deeper pockets.

In particular, Growth Equity. Growth Equity sits somewhere in between venture capital and Private Equity targeting companies with:

More established products and customer bases
20%+ yearly revenue growth
Already profitable or very close to it
Invest based on more robust forecasts and clear business plans

Investments are typically minority but can be majority. It all comes down to the firm!

But it's typically a great option for many vSaaS companies. Why?

Struggling to maintain VC growth rates of 100%+ (it's f*cking hard)
M&A may be a faster/cheaper path to a big business due to lengthy customer acquisition motions
Profit > Growth

If that's you growth equity is likely something to look into. Often the landscape or lists of potential investors interested in companies targeting smaller addressable market companies is opaque, especially as they grow in size.

So...

@YorkGrowth and I put together a list for vertical SaaS founders to turn to:

Below you will find, the GROWTH EQUITY SEVENTY list.

A list of 70 active growth equity investors that like vertical SaaS.

Additionally, we’ve included a few examples of their existing vSaaS portfolio companies.

Hope you enjoy - just click the button below to access the list:

Free List Of 70+ Growth Equity Firms

One vSaaS Breakdown:

Industry Specific App Stores Are A TREMENDOUS Opportunity

A massive opportunity hidden in plain site...

Industry Specific App Stores.

There is SO MUCH opportunity here. Let's break it down...

The App Store launched in 2008. With a toll road business model, Apple takes 30% of revenue generated via third party apps. In 2021 alone, it generated $85B in revenue for Apple. The App Store is one of many factors that skyrocketed Apple to become one of the worlds most valuable companies. It's absolutely brilliant.

BUT a lot of industries still don't have their own version of the App Store...

Vertical SaaS / Industry specific software companies have only recently started developing App Stores. And they're taking a page out of Apple's playbook to massively accelerate their companies value.

A few examples:

#1. Procore

The leading vSaaS solution in the construction industry, launched their App Store in 2016. Their goal? For users to never have to platform for ANYTHING, even separate software not built by them.

#2. Canvas

Canvas is one of the leading LMS / Learning Management Software for higher education. Students, Teachers, and Administrators at college institutions across the globe log in to Canvas everyday to administer tests, collect homework, and run lessons.

Canvas launched their App Store in 2013. Enabling a whole suite of education Apps to sit on top of the Canvas platform. Their goal? Streamline integration and ensure all the data is getting back into their tool, even with actions taking place in 3rd party software.

Successful App Stores do a two things really well:

Integration: data flows between systems seamlessly.
Simplicity: they make it really easy on the user to navigate different apps that they use every day.

The result of this? INCREDIBLE CUSTOMER RETENTION.

And if you haven't figured out that the lifeblood of SaaS businesses is retention now you know..

As the great Jason Lemkin says,

So...

1) Find an industry thats lacking an App Store.

2) Go heavy on integration and simplicty.

3) Before you know it your platform will become THE SINGULAR DESTINATION the industry goes to every day to get work done...

One ‘How To’:

PayPal’s B2B Customer Hack

Trying to find a "boring" industry to build SaaS for?

Study PayPal's b2b customers. The amount of industries still processing payments with them is WILD.

You can build a 10x solution for them by tailoring it to their industry -- out-of-the box dashboards, reports, nudges, etc.

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