It’s a great time to be in SaaS. During the pandemic, the world witnessed how software practically saved the (business) world. This led to cementing the SaaS industry as one of the top cloud computing services poised to move from strength to strength. It also made SaaS-powered workplaces the norm for businesses. Today, 70% of company software use is attributed to SaaS; this figure is expected to rise to 85% by 2025.

Now amid a slowdown and the looming threat of a recession, with mass lay-offs causing a stir worldwide, SaaS stands undeterred. It will continue to come to the rescue of businesses that want to do more with less.
Because of its inherently global business model, B2B SaaS companies can use this imminent economic downturn to their advantage by selling their software solutions to markets worldwide. 63% of B2B SaaS recurring revenue businesses said they were confident of their growth in 2023, and nearly 60% of businesses agree a recession is a ripe time to innovate.

In this blog, we take you through:

• Key SaaS Industry Statistics
• Industries with the most demand for SaaS products
• Tips on SaaS sales approaches
• SAAS Regulatory Compliance
• SAAS Resources for Ontario startups

SAAS Industry Statistics

There are currently approximately 30,000 SaaS companies in the world, servicing 14 Billion customers.

North America has the largest proportion (67%) of the world’s SaaS companies owing to the pioneering development of technologies such as AI, IoT, Robotics, and Cloud in the region. The presence of big players like IBM, Oracle, and Microsoft has also impacted the radical growth rate of SaaS in North America.

US is home to 17,000 SaaS companies, the highest in the world, followed by the UK and Canada, which have quickly become magnets for SaaS entrepreneurs. Some Canadian SaaS brands that are renowned the world over are Shopify, Wave Accounting, Hootsuite, League, SkyHive, Vidyard, and Memi.

SAAS Industry Statistics

There are currently approximately 30,000 SaaS companies in the world, servicing 14 Billion customers.

North America has the largest proportion (67%) of the world’s SaaS companies owing to the pioneering development of technologies such as AI, IoT, Robotics, and Cloud in the region. The presence of big players like IBM, Oracle, and Microsoft has also impacted the radical growth rate of SaaS in North America.

US is home to 17,000 SaaS companies, the highest in the world, followed by the UK and Canada, which have quickly become magnets for SaaS entrepreneurs. Some Canadian SaaS brands that are renowned the world over are Shopify, Wave Accounting, Hootsuite, League, SkyHive, Vidyard, and Memi.

The SaaS market in 2008 was only worth over USD $5 billion, but in 2020, unsurprisingly, the market grew 28x to USD $157 billion.

Because the industry is relatively nascent, there isn’t one singular company that dominates the global market. It’s an open market with equal customer access for old and new players solving the right problem. As of 2020, approximately 30.5% of the market was held by the five largest SaaS companies: Salesforce, Microsoft, SAP, Oracle, and Google.

Positioning your SaaS Product in the North American Market

The early adopters of SaaS were introduced to the industry through Horizontal SaaS. These solutions address a single business function across multiple industries, such as CRM systems, email marketing tools, accounting tools, cloud storage services, or Cloud Platforms.
However, as SaaS evolves and becomes a mature market, especially in North America, Vertical SaaS is set to take center stage. Vertical SaaS tools are typically developed for one specific industry, offering specialized functionality and customization. For example, electronic medical record systems for hospitals, property management software for real estate companies, learning management systems for schools, and more.
If you are building a SaaS product, consider tapping into industries that have built a reputation of being high spenders on Vertical SaaS solutions.

1. Banking and Finance (40%)
2. Media and Entertainment (18%)
3. Government (16%)
4. Manufacturing (12%)
5. Healthcare (5%)
6. Retail (4%)
7. Energy and Utility (3%)
8. Education (2%)

B2B SaaS Sales Cycles in North America

Unlike most other B2B sales, B2B SaaS sales do not include long meetings or relationship-building over dinner and drinks. If a business recognizes you are solving their problem, evidenced by good reviews and a simple sign-up – that’s all you need.
Isn’t that the whole point of SaaS innovation anyway? Get things done quickly.
Additionally, SaaS products are constantly evolving with new features and updates. Entrepreneurs have to stay agile with their sales and marketing processes.

Here are three types of sales strategies that are most effective for B2B SaaS products:

1. Agile Marketing: SaaS companies must be prepared to quickly adapt messaging, offers and pricing packages as customer demands evolve or competition steps in.
2. Content Marketing: Creating and distributing valuable, informative content in the form of blogs, whitepapers, or webinars can attract, engage and convert customers without multiple steps in a sales funnel. The goal of building trust and establishing thought leadership can ultimately drive sales faster.
3. Account-Based Marketing: Targeting specific high-value accounts or customers and tailoring sales efforts to their unique needs and preferences are effective up-selling sales methods for B2B SaaS. This marketing style pays off in building long-term relationships with large enterprises by developing custom solutions within a SaaS product.

SaaS Regulatory Compliance in Canada

You may have a great SaaS product, positioned yourself well, and created a solid marketing strategy. Still, as a SaaS company, if you don’t have your compliance in place, severe consequences are waiting for you on the other side.

In Canada, companies that are not compliant with regulations face significant fines of up to $100,000, public disclosure of offending parties, and enforcement from the government.

SaaS companies operating in Canada may be subject to various compliance requirements, depending on factors such as the type of data they handle, the industries they serve, and the location of their customers.
On a federal level, Canada requires SaaS companies to be compliant with PIPEDA.

The Personal Information Protection and Electronic Documents Act (PIPEDA)

This federal law governs the collection, use, and disclosure of personal information by private sector organizations in Canada. SaaS companies that handle personal data (such as customer names, addresses, and payment information) must comply with PIPEDA’s requirements for obtaining consent, protecting data, and responding to data breaches.
Under PIPEDA, businesses must follow the 10 fair information principles to protect personal information. By following these principles, your SaaS business will contribute to building trust in your business and in the digital economy.

The 10 principles are:

1. Accountability
2. Identifying Purposes
3. Consent
4. Limiting Collection
5. Limiting Use, Disclosure, and Retention
6. Accuracy
7. Safeguards
8. Openness
9. Individual Access
10. Challenging Compliance

Canadian Anti-Spam Legislation (CASL)

CASL is a federal law that regulates commercial electronic messages (CEMs) sent to Canadian recipients. SaaS companies that send marketing emails, newsletters, or other CEMs to Canadian customers or prospects may need to comply with CASL’s requirements for obtaining consent, including opt-out mechanisms and providing accurate identification information.

Payment Card Industry Data Security Standard (PCI DSS)

SaaS companies that handle credit card payments must comply with PCI DSS, a set of security standards developed by major credit card companies to protect against credit card fraud.

Industry-specific regulations

Depending on the industries you serve, SaaS companies in Canada may also need to comply with industry-specific regulations, such as the Personal Health Information Protection Act (PHIPA) for healthcare data or the Canadian Securities Administrators’ (CSA) requirements for online investment platforms.

Other International Compliances Recommended for Global SaaS companies

As a SaaS product, the world is your market; many other compliances are applicable in other regions of the world. Here are some that we recommend you add to your list of compliances to future-proof your global growth trajectory.

Finance Compliance:

• ASC 606: Accounting Standards Codification 606, which sets out guidelines for revenue recognition in financial statements.
• GAAP: Generally Accepted Accounting Principles, a set of accounting standards in the United States.
• IFRS: International Financial Reporting Standards, a set of accounting standards many countries use worldwide.

Security Compliance:

• ISO/IEC 27001: A standard for information security management systems (ISMS) developed by the International Organization for Standardization (ISO) and the International Electrotechnical Commission (IEC).
• SOC 2: A type of audit report that evaluates the controls in place at a service organization that may affect the security, availability, processing integrity, confidentiality, or privacy of customer data.

Data Security and Compliance:

• GDPR: General Data Protection Regulation, a regulation in the European Union (EU) that governs data protection and privacy for individuals within the EU.
• HIPAA: Health Insurance Portability and Accountability Act, a US law that sets out privacy and security rules for protecting patient health information.
• CCPA: California Consumer Privacy Act, a US law that gives California residents certain rights over their personal information and sets out requirements for businesses that collect or sell that information.

Resources for Ontario SaaS startups

Ontario is the 2nd biggest tech cluster in the world after Silicon Valley. The province’s IT product and service exports total approximately $8.3B. Industry giants like Amazon, IBM, Google, Cisco, and Shopify have invested in major R&D operations in Ontario.

LSpark: SaaS Accelerator

One of Canada’s Global Innovation Clusters: Scale AI, has invested C$20 million to accelerate AI startups. One of the projects with access to this funding is LSpark: an Ontario-based SaaS Accelerator.
They partner with multinational organizations (Blackberry/QNX, Telus, Solace) to deliver acceleration programs in high-growth sectors such as Autonomous Vehicle/Connected Cars, IoT, Cybersecurity and health tech. To apply to this accelerator, click here.

BDC: SaaS Financing

BDC, or Business Development Bank of Canada, supports small and medium-sized businesses in all industries at every stage. They finance many SaaS companies offering multi-access points to capital.

Considering most SaaS companies are unprofitable at the early stage, BDC has tailored options like monthly recurring revenue (MRR loan) or quasi-equity loans specifically suited to SaaS entrepreneurs.
You can also try out their free guide for SaaS entrepreneurs titled ‘Essential SaaS Metrics’, which can help you discover metrics to track, monitor, compare and optimize performance in key areas to accelerate the growth of your SaaS business and make you more financing ready.

Want to start up or expand a SaaS business in Canada? 

Set yourself up for success by choosing Ontario for your SaaS startup. At TBDC, we help international entrepreneurs startup and scale businesses to North American markets. Apply for our Soft Landing Program today and join a thriving ecosystem of SaaS entrepreneurs in Canada.