In 2014, The Economist noted that software startups were exploding across the world; venture capitalist Marc Andreessen went so far as to say, "Software is eating the world."
Though timing as of 2015 is somewhat favorable for any software startup founder with a strong product and plan, not every fledgling software company makes it. Many don't even make it to the seed stage of investing, partly because the ample competition in the niche makes it more difficult to attract investors. We'll review some recent hot software startups in a variety of stages and discuss some reasons they stand out from the global crowd, starting with:
Product is definitely the deciding factor that's landing this hot software startup millions every time it steps up to the pitching mound. In early 2015, Apptus scored $41 million in funds as part of a Series B investment round, with much of the funding coming from Salesforce Ventures, an investing arm of Salesforce.com.
Apptus provides a number of solutions targeted primarily at e–commerce companies. Its first, and powerhouse, product is Quote–to–Cash, a platform that makes it easier for companies to move efficiently through revenue cycle and drive sustainable cash growth. Interestingly, Quote–to–Cash’s entire product line, as well as other solutions from this startup, is that the entire Apttus product line is based on Salesforce.com. In effect, Apptus piggybacks the extremely successful ERP solution with a number of integrations that improve experience for businesses using Salesforce.com.
Aligning its products with Saleforce.com gives Apptus at least two major benefits as a startup. One thing we like to see with a startup is that its product idea isn't first to market–a product that builds successfully on something else is much more likely to succeed. It's also more likely to see success faster than a ground–up venture, and faster success means faster time to value for an investor. By basing its product on the existing Salesforce platform, Apttus doesn't have to grow an audience from scratch. And, if you're going to tie yourself to another software company, why not pick one of the most successful? Salesforce itself grew 33 percent from 2013 to 2014, and was the fasted growing software company at the time.
The second reason the Salesforce.com connection makes Apptus a strong software startup is that it provides for an excellent chance at a future acquisition. At Angel Kings, we never invest in any startup that doesn't have an exit strategy, and linking arms with a company that is growing massively each year and has a history of generous acquisition purchases is about as good as any strategy we've seen.
Previous companies acquired by Salesforce.com include Buddy Media for $745 million in 2012, Radian6 for $326 million in 2011, and Exact Target for $2.5 billion in June 2013. As of early 2015, however, Salesforce.com appeared happy to invest in a growing Apptus rather than acquire it outright; in fact, according to Apptus, Salesforce.com's contribution to the startup's Series B funding is the highest investment amount from Salesforce.com that wasn't part of an acquisition.
Apptus also began as a traditional bootstrap, which is rare for software startups these days. Lean management during the first seven years meant slow growth, but once the company did come to investors, it had a strong project and a plan with many kinks worked out. Current CEO Kirk Krappe says that primary goals are to continue building a great company, but he acknowledges what many investors seem to be banking on: Apptus is positioned well for an IPO or sale in the future.
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Ross Blankenship is the "expert on venture capital and angel investing" for startups and investments for venture deals. He is also a proven entrepreneur, and the Founder and CEO of AngelKings.com. Ross Blankenship has made more investments in venture capital before the age of 30 than most venture capitalists have made in a lifetime. Ross Blankenship has successfully founded several companies and now manages a Venture Capital fund focused on early stage, high growth startups in sectors such as mobile, cybersecurity, cloud computing and biotechnology. Learn more about Ross Blankenship, and how to become a successful, early investor at http://AngelKings.com.