What are the Growth Opportunities for SaaS Companies in Brazil?
Flexible payments, automatization, scalability and accessibility.
SaaS distribution model is one of the most relevant cloud computing platforms that are shaping the way we deal with hardware and software. They compete directly with applications runed directly on traditional devices such as desktop and smartphones.
“SaaS (Software as a Service) is the new way of distributing and selling software. It is based on the cloud, so there is no need for a physical distribution of the software. (…) In SaaS model, the software runs on a remotely located server. This means that all you need to access the software is to use your web browser.”
SaaS is a growing market that is shaping the way customers are looking for service providers. Customers all over the world are more interested in subscribing into a service that will provide up to date software every single month they pay their subscription instead of making a one time purchase that will get outdated soon. It is no different in Brazil.
The on-demand economy offers great opportunity for entirely original business models, letting companies scale from small environments to international markets in a heartbeat.
According to a research conducted by the consulting company Capgemini Brazil, SaaS is the most common method to deliver cloud services nowadays, with around 92% of all companies adapting at least one of their services to the cloud like that.
Not surprisingly, many SaaS companies started out just like a few startups in Brazil, Latin America’s largest entrepreneurial ecosystem: by doing what they could to put themselves out there, adapting to the customer’s needs and growing by demand.
Just in Brazil, people spent more than $19 billion US dollars in softwares and services in 2016 alone.
Can you imagine how much more SaaS can grow around the country and beyond?
SaaS companies in Brazil: Bootstrapped and everywhere
According to the research “The Brazil SaaS Landscape 2017“, developed by Rock Content, SaaSholic, Signail Hill, and Redpoint eVentures, even though the SaaS market in Brazil is still starting out, it’s clear that the technology is allowing companies from all over the country to develop and grow.
The state of São Paulo is the first location where you can see multiple SaaS niched companies developing, but you might also want to look for Santa Catarina, in southern Brazil, and Minas Gerais, located in the southeastern side of Brazil.
Those companies are booming all over the country with a particularity in common: 71% of all the SaaS startups in Brazil are bootstrapped. This proves once again that SaaS companies can be sustainable from scratch and are a great opportunity for investors.
They are proud to be small to mid-sized, and less than 10% of them have more than 50 people working with them.
It’s great to see SaaS companies doing so well growing by demand without having to look for investments to put a great idea out into the world, but they’re not alone.
Those companies are getting closer and closer to venture capital firms and incubators, which have their eyes on them after seeing so much growth in bootstrapped companies that are doing amazingly well in a short period of time.
As if this wasn’t enough, those companies are tackling profound problems with a twist, playing with innovation and helping the needs of millions of people every single day.
Growth beyond borders
Analyzing the data between SaaS companies in the US and in Brazil, we can see that 60% of Brazilian entrepreneurs were able to recover their Customer Acquisition Cost (CAC) six months prior than American entrepreneurs.
A great example is Resultados Digitais’ RD Station Marketing, one of Brazilian software leaders when it comes to inbound marketing, focused on marketing tech. This field is growing all over the world aiming to create and sell softwares, analysis and platforms on a subscription basis.
RD Station Marketing took 2.5 years to reach BRL 1 million in annual recurring revenues working with a small team of collaborators. By having essential tools to help their clients automate their own digital marketing efforts since they’ve launched the company, they were able to get around USD 30 million during investment rounds. Nowadays, Resultados Digitais has more than 450 employees and they already expanded their services to other Latin American countries, going above and beyond Brazilian borders in less than eight years.
“With this kind of growth, it attracted local investors such as DGF, Astella and Redpoint eventures. More recently, international VCs TPG Growth and Endeavor Catalyst have invested. The company’s total funding today is north of USD 30 million and RD Station is growing more than 150% year-over-year (…).”
Brazil is the fifth largest economy in the world when it comes to internet, being one of the main international markets for tech-giants such as Google and Facebook. The country’s economy and how easily Brazilians take in transformative innovation technology gives the green flag to a number of companies that are looking to expand.
Digitally focused in all aspects
Brazilian consumers are used to negotiating with SaaS companies directly online. This opens up a great opportunity to focus on their own online marketplace and automating the whole process until they acquire a new customer.
According to Rock Content’s research, 52% SaaS companies in Brazil are using inside sales as their first distribution channel. Those companies are not only making it easier for themselves but also for their customers by providing their software without any delays or human-approval in many cases.
Right after inside sales, field and channel sales are rated as the most efficient ones when it comes to SaaS in Brazil.
It’s important to highlight that in many cases SaaS companies in Brazil are not focused on digitally native customers.
Some of the most important sectors people are investing in around the country is AgriTech, where startups are pioneering with IoT sensors, mobile tech, big data and many more to make the whole process – from cropping yields to improve sustainable practices – easier and more intelligent.
Another great field to explore in Brazil is HealthTech. Customers are demanding more high-end healthcare all over the country, medical technology is advancing fast and making this sector a leading investment option.
There’s plenty of options to explore in a country with a growing middle class highly engaged in social and digital media consumption. The country is a great market example growing at an accelerated pace, especially if you compare it with other markets all over the world.
Customers are unique
Expanding across international markets is challenging for any sort of business. Having a deep understanding of regional differences and key changes among customers is very important to have a successful entrance strategy.
By tapping local network resources and partnering up with companies and entrepreneurs that are already used to the market you’re focusing on can make a huge difference.
Even though the opportunity is out there ready to be taken, it’s important to keep in mind that Brazilians have their own way of dealing with marketplaces and SaaS companies. You can absolutely find options to develop and offer cloud services to Brazilians, but make sure to study the market first and get exactly what are the gaps that no other company is filling successfully nowadays around the country.
Local SaaS products are not a simple copy of your own products offered to any other sort of customers – they need to be individually adapted to the culture you’re trying to break in.
Get your idea, adapt it to local needs and work through the Brazilian processes. This will make your chances of succeeding way higher than just ‘copying and pasting’ something from one market to the other.
When the time comes, you will be able to get the solution that you’ve developed and expand it to other countries around Latin America, just like many other SaaS companies are doing.
This will be a great advantage due to the geographical proximity and the reduced competition among Latin American SaaS companies.
Brazilian entrepreneurs are working hard day and night to boost their companies in different fields all over the country. They’re not only looking for innovation but true, meaningful change.
Are you ready to go forward with your SaaS business in Brazil?