Recently BetterCloud, a SaaS tool management and security platform, raised a $75 million Series F. The round was led by Warburg Pincus and brings the total funding of the company to $187 million.
Why highlight this transaction?
BetterCloud’s platform provides visibility and security into the SaaS tools that companies use internally. BetterCloud, “Offers integrations into multiple SaaS apps including Box, Dropbox, Salesforce, Zendesk and more.” Using the platform customers can set policies and configurations to ensure security and optimize their internal spend of these tools. It also enables them to audit the use of their tools, which provides additional value for security purposes and spend optimization.
The York IE team has chosen to make this our transaction of the week (TOW) because a round this size, with an assumed large valuation, is a great example of the importance of SaaS tools to businesses. It also shows that while many industries are struggling during the COVID-19 pandemic, many SaaS companies are still well situated.
The SaaS Advantage
Robert Smith, the founder and CEO of Vista Equity, a large private equity firm focused on buying, or investing in SaaS providers once said that he believes SaaS contracts are higher up the capital structure than debt. What he meant is that in a downturn a business was more likely to pay their monthly or annual subscription fee for a SaaS tool than the interest on their outstanding debt. This is because companies are so reliant on SaaS tools to run their day-to-day operations.
BetterCloud, and its investors, are capitalizing on this dynamic.