Seriously, we have enough. There were 2,200 new SaaS companies founded in 2022. That’s six per day.
60,000 companies already existed when they started-up.
And we all know the math--the vast majority will fail quickly. Many in the remainder will eke out an existence on the margins of a category. Others will become zombies unable to grow, but perhaps equally horribly, unable to fail.
Here’s why ---> the vast majority of these companies will be founded on an idea about how to solve a problem better.
And the tech behind that solution is likely quite impressive.
The rational alternative it offers buyers should be a no brainer (if brains were perfectly rational microchips). But human brains don’t work like that. We take short cuts. We use biases like categories to help make sense of--among other things--62,200 freaking SaaS start-ups.
Which means people are very unlikely to give your solution enough time to even realize it is better. Why?
Because #1. They’ve already solved that problem; and #2. They have procurement people to figure out who can do it the best for the least. Have a good time racing to the bottom of that commodity price war.
There is one other class of startups I haven’t mentioned, however. Those that go on to blow the doors off valuations, IPO and dominate their category.
These are quite often the companies that set out to solve DIFFERENT PROBLEMS. And create a new playbook for how to do that.
In other words, they Designed, Developed and Dominated a new Category.
And now, on average, they’ll soak up 76% of the market cap.
Stop coming up with ideas, and start coming up with problems.
Source: Pitchbook
