The pandemic hit Canadian SaaS funding hard. SaaS companies have raised one fifth of 2019 numbers so far this year, according to L-SPARK’s latest report. The amount of deals closed this year is sitting at 127, with 2019 seeing a total of 206.
Despite this impact on venture capital investment, SaaS companies continue to accelerate in the context of the pandemic, finding ways to grow and adapt to changing circumstances.
By their very nature, digital products were primed to fare the best during the crisis, but by no means did that guarantee SaaS’ ability to maintain continuity.
The SaaS industry as a whole has been extremely resilient due to its openness to change and willingness to learn about operating in this new context.
Here’s how Canadian SaaS showed resilience and what the industry can do to stay on a path to accelerated growth.
Resilient companies adopted a ‘change’ mentality
The SaaS companies that came out the least unscathed after the first months of the pandemic were those that were decisive in helping their customers weather the storm and adopted a flexible attitude to embrace new ideas and requests from those customers.
They were able to provide solutions to the new immediate needs of their customers and adapted their own operations to do so. What’s more, many of SaaS businesses’ products played a key role in helping their customers transform their operations from being physical and location-centric, to functioning remotely and with a distributed workforce.
Many of the customers that were hit the hardest by the pandemic were able to continue with operations by working with their SaaS company suppliers to embrace a “digital first” approach to serving their market.
Educational institutions were forced to embrace online classes, retailers continued serving their customers through ecommerce, and restaurants and food suppliers transitioned to a take-out model with online customer service channels. They placed new urgent demands on their SaaS company suppliers which, when delivered, allowed them to scale.
Admirably, the majority of SaaS companies met the new needs of the market as rapidly as the world was changing, rather than trying to wait out the pandemic or continue with “business as usual.”
For example, edtech startup Edsby is thriving: It recently received $5.3 million in series A funding and has onboarded more K-12 school district customers this fall than in any previous year.
Meanwhile, Montreal startup Heyday AI is providing chatbot technology to retail stores that can no longer communicate with their customers in-person.
The role SaaS has played – and continues to play – is vital in powering the entire business community through these tumultuous times. This exact need from the wider ecosystem is much of why the sector has been able to not only stay afloat, but scale as well.
Lessons from the pandemic
While well-positioned to weather the COVID-19 crisis, Canadian SaaS companies were eager to absorb lessons on handling one of the biggest economic crises the generation has seen.
After directing L-SPARK’s mentorship of a number of startups during the height of the crisis, I can share some of my key observations on the most important lessons learned.
1) Digital first. Going digital wherever you can is crucial to business continuity in this new era. This is apparent not only in the products you provide to customers, but also in the products you use internally and your day-to-day processes. This means embracing the remote work model and fully incorporating the use of online collaborative tools within your team.
Many Canadian companies have succeeded in keeping a strong focus on company culture and communication throughout the pandemic, with the highest performers listed in LinkedIn’s list of the Top 20 Startups in Canada to Work For.
2) If you are doing the same thing you were doing yesterday, you’re doing something wrong. We’re in a new reality: It’s not enough to simply go with the flow – you should actively look for opportunities to adapt.
Even those who have fared well during the pandemic need to think about how they will continue to fit into the post-crisis world and serve new needs.
3) Focus on your customers’ survival – today and tomorrow. Many of your customers will still be struggling as a result of the pandemic, and have a long road to recovery before them.
By becoming indispensable to them, you can help them to regain strength and ensure their continued loyalty to you in the process.
Canada will see long-term benefits from SaaS’ resilience strategies
Canada’s Innovation Economy Council recently stated that “all sectors of our economy depend heavily on a vast supply chain of technology companies to meet needs in areas such as cybersecurity, artificial intelligence, data privacy, e-commerce and clean technology.”
This has never been more true, as SaaS companies form a crucial part of the wider Canadian business ecosystem. By helping companies adopt a digital-first strategy and doing so themselves, SaaS providers promote business continuity and drive economic stability and growth.
In fact, ICT industries were one of three Canadian business sectors that saw growth during the pandemic. On a global scale, a survey of 2,400 IT leaders found that companies are planning to bump up use of SaaS products by 72% between now and 2022.
At the same time, we cannot ignore Canada’s history of technological innovation and its commitment to new trends and producing the businesses that the next generation needs.
The government has taken special measures to provide vital support for startups and small businesses, and recognizes the importance of these organizations in the fabric of the Canadian economy.
As the Canadian business community continues on its path to recovery and growth, the importance of SaaS in supporting this cannot be overstated.
By always adapting to best serve the needs of their customers and applying the crucial learnings of 2020, SaaS businesses will retain resiliency and continue to provide vital support for the digital transformation of businesses across industries.
Disclosure: This story is brought to you through an ESPACIO portfolio company