SaaS PE Market Analysis

News, insights and updates from the team at Bloom Equity Partners

Hey Founders and Friends,

We hope that you have been enjoying the first few Weekly Blooms of 2022. If you have any specific topic/question that you would like us to discuss in The Weekly Bloom, email us and we will be sure to address them!

Now let’s jump into this week’s newsletter!

Q1 is quickly coming to a close and the report that we constantly look forward to has arrived. Earlier this week Bain & Co. released the 2022 Private Equity Report. This gives an exceptional breakdown of key trends and insights from across the buyout market and is a must-read for any founder, operator, and investor.

We wanted to share some notable trends as it relates to software investing:

1. Technology now accounts for 31% of the buyout market

   • Since 2016 tech buyout funds have raised more than $270 billion.

     

2. Funds aimed specifically at technology buyouts have expanded significantly over the past decade

   • 16% of buyout funds in 2021 were technology focused.

   

3. Buyout multiples continue to rise as new capital hits the market

   • The median EV/EBITDA multiple for tech buyouts in 2021 was 18.3, down slightly from 21.4 in 2020.

     

4. Software buyout funds are becoming increasingly comprised of infrastructure software and horizontal application software.

   • Buyout firms will continue to increase their portfolio weights in these categories over the coming years given the growth opportunities. The subsectors that have benefited the most from these sustained tailwinds include cloud computing, DevOps and Martech.

     

If you enjoyed this breakdown make sure to check out the following must-read articles in the report 👇

📚 Private Equity’s Inflation Challenge

📚 Chasing Disruption: The Brave New World of Growth Investing

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Favorites from the Ecosystem

Investors👇…..

Orlando Bravo @OrlandoBravoTB

Software recurring revs for high-quality companies are very resilient, but multiples on those revs are not. Buy earnings, not revenues.

Sandy Kory @sandykory

even if a SaaS company's self-serve path is only used by a minority of customers... it has a product execution capability that is a major advantage over competitors that lack it

Founders👇……

Will Cannon @iamwillcannon

8 lessons from building a software company with $8 million in sales:

Jason ✨BeKind✨ Lemkin #ДобісаПутіна @jasonlk

These days I am seeing too many hyper-talented CTOs wait too long to bring on a VP of Eng In the old days, a VPE might be a threat to a co-founder CTO, taking over a lot of their job I rarely see that today. Instead, a great VPE gives leverage to a great founder CTO

Operators👇…..

Steve Ressler @steveressler

Was talking to early SaaS founder who asked what are the top 3 roles in early stage. My answer is just focus on 1) Build the product 2) Sell the product. Whether that's co-founders doing the work or hires doing it. The key is get to working product and a few early customers.

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What We’re Reading and Listening To…

📚 The SaaS Org Chart

📚 The Time Value of Time

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News from the Industry: deals, deals, and more deals 💰

UserZoom Announces Strategic Growth Investment from Thoma Bravo

Securonix Receives Over $1 Billion Growth Investment

Banneker comes back to market quickly with Fund II

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End Note 🔚

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