This is the first in our blog series ‘SaaS Sessions,’ which was inspired by a recent roundtable event in which five Dutch SaaS entrepreneurs and I had a discussion and shared insights. In this one, I discuss ambitions for Dutch SaaS companies, the steps for scaling, and expanding overseas. Enjoy!
The Netherlands is a country with a lot of successful software companies. With software providers like Mendix, Exact, Adyen and AFAS, we’re doing just fine. That was the conclusion reached in the Main Software 50, published at the end of 2018.
More and more companies are seeing their revenue come from Software-as-a-Service. Gert Kwetters, CEO of Visionplanner, emphasizes: “SaaS is an online business, based on a subscription model and scaling these online business models is a major focus.” The consensus around the table is that the two major steps to develop a new SaaS service, then scale it, usually involve:
- Automating existing business processes and marketing them in product form as generic digital services.
- Developing new, supplementary services that make it possible to boost returns per customer.
Joris Moolenaar, CEO of Karify, an online platform supporting eHealth and integrated online treatment for mental healthcare issues, confirms this impression. “We started by looking at the processes in mental healthcare. The status quo was: consultations at the location, not provided remotely. So, then we had to decide which types of therapy and treatment we wanted to provide online, test if it was workable, both technically and operationally, and then determine if the treatment was actually having an effect. By now, we are serving ten mental healthcare providers, representing a total turnover of 2 billion euros.”
This new treatment concept is a major improvement, as patients previously have had hardly any say in how mental healthcare is structured, and they have to travel to impossible locations at impossible times and spend a lot of time getting there.
Through the participating mental healthcare providers, Karify can reach hundreds of therapists and thousands of clients who use the platform. Other SaaS providers at the table also use an indirect approach. For Visionplanner, an online platform for administration and accountancy firms and their clients, and for NMBRS, an online payrolling system, the accountants offer access to the clients that use their software. Cloudbilling, an invoicing tool for pay-per-use SaaS or CSP products and services, and Postex, a cloud platform for automating client communications, do not have an indirect channel.
Dreaming big: taking on the United States
Although the SaaS entrepreneurs who were present have not yet hit their growth ceiling in the Netherlands, major opportunities are beckoning across the border. Everyone at the table agrees that international ventures have real potential. But, is it just another hype?
Some sense of perspective is warranted here, the guests agree. Martijn de Wilde, Managing Director, Postex says, “American companies benefit from having access to a large, homogeneous market. Moreover, entrepreneurship is on a whole different level there. The rules of the game are different in the Netherlands, or even in The UK or France.”
There is an ‘incredibly high’ threshold for operating in the US market. Just look at what it costs to hire good sales staff there. De Wilde states, “A market entry in the US takes a massive amount of capital – and if you’re going to have a serious chance of success in a business venture there, you’ll basically have to relocate there yourself.”
Unsurprisingly, these Dutch SaaS entrepreneurs are focusing their plans for expansion primarily in Europe. In our geographic expansion, we ask ourselves two questions:
- Does our software scale to the target market?
- Does it fit within the context of how care is currently being provided?
Karify is now operating in 5 countries, although the Netherlands is its primary market. However, we do see that digitalization of healthcare is spreading in similar ways, offering lots of new opportunities. Within Europe, the Netherlands is a front-runner in digitalization.”
The main question for SaaS providers is whether the software can be scaled internationally. How much do you need to adapt your software in order to localize it? What are the barriers to access a new market, and what sales options does it offer?
Michiel Chevalier, Founder of NMBRS, which has a presence in Sweden, Denmark, and Portugal, couldn’t agree more. “I firmly believe that it’s difficult to roll out a presence in your first region, all the way to the sixth. A lot of time and money has to be invested in adapting the software in order to localize the product. Once you’ve passed that point, it increasingly becomes a matter of tweaking the settings; that’s much easier.”
Realizing growth ambitions requires financing. How do SaaS providers find the growth capital to put their plans into practice? Read all about it in Part 2 of our SaaS Sessions series.