As we continue through a global economic downturn, every industry is faced with a set of challenges and opportunities.
SaaS is no exception. We’ve seen the headlines of hiring freezes, layoffs, and poor stock performances. But fortunately, it’s not all doom and gloom. In fact, TechCrunch recently shared a bright spot that U.S. venture capital activity in the third quarter “was far from catastrophic”, suggesting it may even be an ideal time to build a SaaS business.
Recognizing the regional nuances of our industry, I’ve been interested to hear from partners, customers, and other SaaS leaders across the globe. Last month, I was fortunate to visit G2’s London office and also speak at SaaStock in Dublin.
The Accel 2022 Euroscape
At SaaStock in Dublin, I enjoyed connecting with Philippe Botteri, partner at Accel, shortly after he and Accel VP Richard Kotite unveiled The Accel 2022 Euroscape. The theme of this year’s report is “The Reset” — and the introduction of their analysis speaks to precisely why it’s time to approach SaaS in Europe with a fresh mindset:
“On the public side, $1.6T of market capitalization has been lost in the global Euroscape cloud Index with the average forward revenue multiples plunging from 17x a year ago to 6x today. On the private side, cloud funding in Europe, Israel, and the US is down 42% in Q3.”
Despite this much-needed reset, Accel notes that trends like digital transformation and shifting to the cloud remain strong. Additionally, while the overall funding decline in Europe and Israel is consistent with what's been happening in the U.S., we’ve still seen large rounds of investment occurring over the past 12 months.
The role of customer centricity in European SaaS winners
Knowing that it’s still possible to win in a down market, who are the Euroscape leaders that have collectively raised $8B? And, what are the keys to their success?
One commonality they share, which I was pleased to learn, is that they’re fueled by higher scores and more reviews on G2.
For context, G2 scores products and vendors based on the 1.9M+ verified peer reviews gathered from our user community, as well as data aggregated from online sources and social networks. With this methodology in mind, European SaaS companies who have higher G2 scores – and therefore have higher customer satisfaction – are more likely to be market leaders.
It’s always been important to have happy customers, but during times like these, it’s crucial to double down on treating your customers as your most valuable marketing assets.
My takeaways and forecast
While SaaS investment will likely be down for at least a few quarters, we remain very bullish on the prospects for European and global SaaS innovation and growth.
We met so many high-energy SaaS leaders and entrepreneurs in Dublin who are building the next generation of high-value SaaS apps. Thus, we’re confident more global leaders like UiPath, Celonis, and Miro will emerge from Europe.
We've also shared our 5 key lessons learned on how to weather an economic downturn, offering more insights on how to survive and ultimately thrive through these challenging times.