35% of startup investments go to SaaS

Software-as-a-service (SaaS) startups received more than a third of total European VC investments for 2023.

In today’s insights 🔍 

• The growth of SaaS startups
• Early-stage SaaS investments
• B2B tech infrastructure

Read Time: 2.5 minutes

This week we examine the high-growth nature of software startups and a shift in investor priorities.

The growth of SaaS startups 🧩

In 2023, SaaS startups received $19.6bn which is around 35% of the total investments in European startups. The data showcases an extensive growth period, where SaaS funding saw a more than twelve-fold increase from $3.8 bn in 2015 to $46.8bn in 2022.

This comes when VCs are starting to see SaaS startups changing their focus from prioritizing growth at all costs to efficient growth i.e., profitability.

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Growth of early-stage SaaS 📈 

SaaS startups received over 50% of early-stage VC investments for 2022. This follows a 30% year-on-year increase in startup investments for SaaS and a 6% uptick in the number of early-stage funding rounds.

This trend underlines investors' focus on the cost-effective scalability and growth potential of SaaS startups, emphasizing the search for startups with a scalable revenue model.

Weekly Startup News 🧑‍💻

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Startup raises one of the largest Series A in Belgium
AI computer vision startup Robovision raises $42m Series A from Target Global to scale in the US.

B2B tech infrastructure 🌱

88% of Europe's SaaS investments target B2B startups, underscoring the growing demand for enterprise software that provides a competitive edge for the digital ecosystem.

The emphasis on B2B over B2C underscores the value placed on high-growth tech infrastructure supporting digital innovation and scale for both startups and established companies.

Our 2023 Startup Analysis

In Q3 2023, we unpacked the European startup investment trends, noting a downturn amidst economic challenges.

If you haven’t yet, now’s the time to catch up on our insights before we release our comprehensive 2023 recap report.

SearchVentures Insights

The SaaS sector in Europe, receiving $19.6 billion in 2023 and representing 35% of all startup investments, underscores a significant shift towards startups that balance growth with profitability.

With 88% of these investments targeting B2B solutions, this highlights the early-stage role of SaaS in Europe’s digital economy and the value derived from a supportive tech infrastructure for innovation.