New VC Rules for On-Demand Software: "
Expansion round specialists, Insight Venture Partners, provide their list of must-haves for investing in on-demand software companies.
Deven Parekh and Peter Sobiloff, Insight Venture Partners
Sep 23, 05
On-demand is the big game in software today.
We're bullish about the prospects for recurring-revenue software solutions. Whether you call them application service providers (ASPs,) on-demand vendors, or even a subset of software-as-a-service (SaaS) companies, the opportunity is the same: a growing company with streamlined operations that provides a hosted, pay-as-you-go software solution which earns them a steady revenue stream, as well as a satisfied enterprise client base.
But not every software vendor can play successfully in this emerging field. We use a new set of criteria we use to analyze on-demand software vendors as VC investment opportunities.
The Potential for On-Demand
There is a new and emerging market for best-of-breed ASPs. The underlying business model shift away from perpetual licenses to recurring revenue will enable smaller vendors to compete and grow in today's world of software megavendors.
The recurring-revenue model has several advantages for customers. Turn-key implementation. Low maintenance efforts. Continued vendor attention. These advantages will spawn a host of vendors that offer today's enterprise applications via an ASP or recurring-revenue business model.
After these recurring-revenue vendors grow, you'll begin to see ASP rollups: on-demand vendors who team up to offer best-of-breed, on-demand suites of enterprise solutions.
You'll also see some vendors - Salesforce.com for example - emerge with a much bigger footprint in the "
Tuesday, October 04, 2005
Monday, October 03, 2005
SandHill.com | Finance | Consolidation? What Consolidation?
SandHill.com | Finance | Consolidation? What Consolidation?: "OPINION
Consolidation? What Consolidation?
Software industry insiders present their views on the long-anticipated Oracle-Siebel deal: what it means to product innovation, the CRM space, the health of the software industry - and whether it was a good deal in the first place.
M.R. Rangaswami, Sand Hill Group
Sep 16, 05
Finally. The Oracle-Siebel deal is done and the industry can stop speculating about it. Interestingly however, the deal seems to have woken some observers from a deep sleep. Consolidation has been going on for years. The latest deals - specifically Oracle's aggressive buys - have simply made the trend front page news.
But broader awareness of big software mergers is important in and of itself. The sense that young companies cannot make a go of it alone any longer, that they must find a 'Big Brother' to take them under their wing, dampens enthusiasm of many software executives and investors.
This is the wrong reaction. I would argue that innovation and opportunity continue to drive the software industry today - even in the face of these megadeals.
Innovation Continues to Power the Industry
Consolidation is most certainly accelerating. However there are major sectors which have yet to see any major mergers. Take middleware - or business intelligence. There are many small markets which continue to innovate and thrive.
Even in established software categories, innovation thrives. Look at Salesforce.com. NetSuite. These vendors operate in so-called mundane application areas but continue to grow rapidly and flourish at the same time consolidation is going on in their sector.
These upstarts and other vendors are succeeding by innovating - both product- and business model-wise - in areas where megavendors have weaknesses. T"
Consolidation? What Consolidation?
Software industry insiders present their views on the long-anticipated Oracle-Siebel deal: what it means to product innovation, the CRM space, the health of the software industry - and whether it was a good deal in the first place.
M.R. Rangaswami, Sand Hill Group
Sep 16, 05
Finally. The Oracle-Siebel deal is done and the industry can stop speculating about it. Interestingly however, the deal seems to have woken some observers from a deep sleep. Consolidation has been going on for years. The latest deals - specifically Oracle's aggressive buys - have simply made the trend front page news.
But broader awareness of big software mergers is important in and of itself. The sense that young companies cannot make a go of it alone any longer, that they must find a 'Big Brother' to take them under their wing, dampens enthusiasm of many software executives and investors.
This is the wrong reaction. I would argue that innovation and opportunity continue to drive the software industry today - even in the face of these megadeals.
Innovation Continues to Power the Industry
Consolidation is most certainly accelerating. However there are major sectors which have yet to see any major mergers. Take middleware - or business intelligence. There are many small markets which continue to innovate and thrive.
Even in established software categories, innovation thrives. Look at Salesforce.com. NetSuite. These vendors operate in so-called mundane application areas but continue to grow rapidly and flourish at the same time consolidation is going on in their sector.
These upstarts and other vendors are succeeding by innovating - both product- and business model-wise - in areas where megavendors have weaknesses. T"
Subscribe to:
Posts (Atom)