In a day and age of rapid technological innovation, the public has come to demand an incredibly high level of technical sophistication from all aspects of their lives. Where the commercial sector has accelerated to meet this demand, the public sector has historically been resistant to change. The Government Technology (“GovTech”) sector arose in response to public demand for more efficient, affordable, and secure government processes from a segment plagued by antiquated systems and outdated procedures. Only recently have government entities begun leveraging innovative and agile solutions to meet increasing operational demands and produce more citizen value while remaining adherent to stringent budgets.
Catalyst has been investing in SaaS since before the term was coined (we funded MessageLabs, an enterprise email security SaaS offering, in 2000). Since then, we have invested in several other growth stage SaaS businesses, including MINDBODY (NASDAQ:MB, business management software for health and wellness studios), Ascentis (human resources management software), Jobvite (social recruiting software), and Conductor (content intelligence software for marketers), among others. Over the years, we have shared our views on how the SaaS space is evolving, including a research piece (SaaS Investors: Mind the Valuation GAP (Growth at Any Price)) that introduced our proprietary equation for valuing SaaS companies.
Software-as-a-service (SaaS) companies have had a great run over the course of the current business cycle. The sector has routinely traded at a multiple above five times revenue, even while having low or negative profit margins. From 2010 to 2013, market observers posited that valuation multiples in the sector were driven by growth alone – the faster the better – no matter how much cash burn it takes to achieve. Since the public market for software stocks hit a speed bump starting back in Q1 of 2014, however, there has been a general perception that profitability is becoming more of a factor in driving SaaS valuations. This awareness is driving capital allocation discussions at companies across the SaaS sector, both public and private. Should a company raise money to “keep its foot on the gas?” Or should it perhaps slow growth a bit but make the move to “EBITDA-positive?”
Catalyst Investors was founded in 2000 in New York by three ex-bankers keen, in managing partner Brian Rich’s words, to “start our own thing”.
But it was years before their particular type of private equity investing had a name, he says.
Convenience, pricing and reliability are critical for shipping services to gain traction, and these innovative consumer- and SMB-centric shipping solutions bring logistics and supply chain management (SCM) to the mainstream. Similarly, last holiday season we looked at SCM through the lens of a consumer in our blogpost about the importance of having efficient SCM systems to ensure that gift purchases arrived on time and in the correct size. We have continued to research the B2B SCM software sector, and we created a [supply chain management cloud-based challengers market map] [link to market map] and [research report] [link to memo] to highlight the key trends.
MINDBODY, the largest provider of business management software to the health, fitness and beauty industry, surpassed the 25,000 subscriber benchmark on May 28th 2013. With over 1,000 new subscribers boarding each month, MINDBODY continues to accelerate and remains the fastest growing software provider in the wellness industry.
MINDBODY, the largest provider of online business management software in the health and wellness industry, acquired Jill’s List, the leading online platform for Integrative Healthcare practitioners. The acquisition marks the launch of MINDBODY’s new wellness network which connects consumers, employees and doctors with integrative healthcare practitioners, riding the rising tide of consumer-driven healthcare and facilitating the adoption of a more holistic and preventive approach to wellness.
MINDBODY, the largest provider of online business management software to the health and wellness industry, partnered with the Canadian-based athletic apparel company lululemon to launch the om finder app, now available in iTunes. Produced by lululemon athletica and powered by MINDBODY’S Finder technology, the om finder app marks the first major digital initiative for lululemon as part of their commitment to create more hyper-local experiences for their guests.