Private Equity Invest in Software Firms for SaaS Conversion

Man pointing to the Saas informationPrivate equity firms have begun to invest in software companies that have not yet offered software as a service (SaaS), by investing in these companies to help them transition to SaaS

For cloud users, a software platform will be necessary for SaaS licenses management, due to the influx of new businesses preparing to make the switch to a new sales model.

Investment Reason

Private equity firms have focused on investments in companies with subscription models from different industries, ranging from consumer products to perishable items.

As long as their target companies have a steady source of recurring revenues, businesses with such models can expect to receive support from equity and venture capital firms.

In the tech industry, private equity groups have considered SaaS to be one specific way for a software company to achieve recurring revenue.

This is the reason behind their push to support those that have been preparing to convert their subscription models into a SaaS structure. Meanwhile, software companies that cater to the European market should be aware of a new policy on data privacy.

New Regulation

The EU General Data Protection Regulation (GDPR) will be in place by May 25, 2018, so it is better to be check if your business is ready to comply with the new policy as early as now.

The regulation covers those that either sell products or services to EU citizens; websites that use cookies; hire residents in the EU and gather information that includes data about EU citizens.

SaaS companies should start familiarizing themselves with the policy’s requirements. They should also consider an establishment of a group exclusively designated to find out issues associated with GDPR.

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Investments in SaaS continue to grow while its popularity among business continues to increase at the same time. Service providers, however, should make it a point to ensure that their operations remain in line with current and future regulations to avoid issues on compliance processes.