American

Time to Get SaaSy

To our Valued Investors:

Many of Iron Edge VC’s weekly communications have begun with a little trip down memory lane, and today’s entry will be no exception. We know that the trend exists, and perhaps you have already picked up on it as well. The exercise provides an opening that we hope not only makes our newsletters different from whatever else you might be reading from other VC funds, but also serves as an effective way to put the technological advancements we’re describing into an appropriate perspective.

This time, we will start our journey with a quote from the September 1987 issue of Commodore Magazine. Yes, “that” Commodore, the now-defunct purveyor of “business machines”: “When the computer revolution was unofficially announced in the early 1980s, all indications were that it would change the world. Experts predicted that within five years, every household would have a computer. Dad would run his business on it. Mom would store her recipes on it. The kids would do their homework on it. Today only 15% of American homes have a computer – and the other 85% don’t seem the least bit interested. There is a general feeling that the home computer was a fad and that there is really no practical purpose for a computer in the home”. This passage grows funnier and funnier over time, and not only because of how badly this supposedly cutting-edge technology company missed the mark. How about Mom running her business on a home computer and Dad storing his recipes on it? Commodore went belly-up about seven years after this stunning display of politically and otherwise incorrect futurism. Many credit the development of the internet, then more commonly known as “the World Wide Web”, for the surge in home computer sales. With the novelty of pulling information into one’s home through a telephone line inserted into the back of the machine, uses for a home desktop expanded dramatically beyond file storage and word processing. As an added measure, the World Wide Web served as a gateway to America Online’s fascinating chat rooms and electronic mail network. The ticket for entry into this magical new realm could be found — free of charge, no less — at your local Waldenbooks or Sam Goody Records. Near the checkout register, the slim but flashy AOL packages contained a disc that could be inserted into a computer’s CD-ROM drive, and after a long series of clicks and whirrs accompanied by the manual entry of some long alphanumeric codes, the user would be ready to join Tom Hanks, Meg Ryan, and the rest of the stylish You’ve Got Mail set.

This was an admittedly long stroll down memory lane but trust us, it’s leading somewhere. Those free CDs from AOL contained, of course, the software that would deposit its programming into a home computer’s hard drive. The delivery method seemed cutting-edge at the time as it replaced the floppy disc. Office supply stores in those days had sections devoted to selling compact discs encoded with software for a wide variety of purposes. Tax preparation, interactive encyclopedias, children’s reading instruction, last will and testament preparation, and, yes, recipe compilations could all be found on these shiny objects. The software was often rather costly because after all, programmers need to eat, too. Things have changed and evolved, though, in how commonly used software is brought into your home. When you wish to begin using Gmail or any other email service, or WhatsApp, Zoom, Netflix, Skype, DocuSign, or a long and constantly growing list of other useful applications, you don’t need to drive to Staples before getting started. Because those are all Software as a Service (SaaS) companies, the necessary programming is embedded into your rig without even having to plug a telephone line into the back.

In simple terms, SaaS is a software licensing and delivery model that allows users to subscribe to the centrally hosted software. It is “on-demand software” that is considered to be part of cloud computing, with the masses of consumers gaining access through ordinary web browsers like Google Chrome, Safari, or whatever means you use to tap into the internet. The hallmarks of a good SaaS application include multitenant architecture (meaning that all users share a single, secure, and centrally maintained infrastructure and code base), easy access, and uncomplicated customization. For instance, it only takes a few moments to securely sign in to Netflix and add a user profile for a family member. In fairness, though, the most basic form of the SaaS concept predates those old AOL discs by a measure of decades. As far back as the 1960s, IBM maintained a service bureau business that provided computing power and database storage from their worldwide data centers to banks and other large organizations. These functions were generally unknown to anybody outside of IBM and their corporate clients, of course, but the widespread internet expansion of the late 1990s changed everything with a new class of centralized computing. Today, we pretty much take the convenience for granted.

For now, let’s focus on the way IBM deployed SaaS about sixty years ago. All of those operations were business-to-business functions, naturally, because private residences at the time were just entering the age of color television and self-cleaning ovens, and home computers existed only in science fiction. Today, though, as home SaaS examples abound, Iron Edge VC has been immersed in what we call business-to-business “SaaS plays” within the private company marketplace. These investments, some of which have already yielded profitable exits and others for which we have very high expectations, are in enterprises whose direct customers are other corporations. NextRoll, for instance, pumps up company visibility on the web and brings more consumers to their clients’ virtual storefronts. Amplitude fine-tunes corporate advertising campaigns to maximize their effectiveness. Attentive Mobile has brought consumer engagement to unprecedented levels for retailers. Introhive, based in Fredericton, New Brunswick, is the latest company to join our distinguished list of SaaS play investments.

Introhive is a leader in a sector of Customer Relationship Management (CRM) known as relationship intelligence. Driven by advanced artificial intelligence, relationship intelligence platforms establish, grow, and nurture relationships between a corporation and its employees, vendors, and clients to build more trust. Trust, of course, is an indispensable driver of an enterprise’s success. Introhive’s function is “empowering peak performance in revenue teams”. Businesses achieve revenue acceleration when sales, operations, marketing, IT, administration, and customer success teams are all aligned and working towards a shared goal. Introhive’s SaaS helps its customers to capture and retain strategic relationships, thereby boosting revenue. They automate mundane data entry tasks, freeing up many valuable work hours. Introhive identifies and reveals new business lines, and they guide clients on how to make the best use of the data that comes out of the CRM. They cleanse contact data, thereby keeping the details about important relationships accurate and up to date. This is a critical function that had been badly neglected before Introhive entered the scene. Up to 70% of a typical (unattended) contact list will have outdated information after one year due to job changes, geographical transfers, and departmental shifts. Introhive’s automatic updates eliminate the outdatedness and the accompanying risk of broken communications.

Some of Introhive’s corporate clients include the likes of Hitachi Solutions, Manpower, and PricewaterhouseCoopers. Manpower has 2700 offices in 80 countries and territories. PwC employs nearly 300,000 people. They entrust Introhive with the critically important maintenance of relationship intelligence, which on its own reveals much about the SaaS’s effectiveness and reliability. Introhive essentially creates relationship maps for the contact lists of companies of all sizes. By automating CRM, they help to strengthen customer relationships and provide better sales insights. Introhive prepares employees for sales meetings by compiling reconnaissance in the form of a custom email report containing all sorts of information about that company, including recent and relevant news and notes about prior meetings. In addition, Introhive’s AI ferrets out new potential relationships from within a business’s existing network. Their user interface is known for its ease of use and its ability to eliminate many hours of administrative overhead that otherwise would have been spent on manually connecting these dots. All of this leads to more time spent with a focus on the client, and with much better “intel”, which translates to more revenue. It’s easy to understand why Hitachi, PwC, Manpower, and so many others are willing to pay Introhive for SaaS that so effortlessly cranks up their respective professionalism and, as a result, their income.

The adoption of relationship intelligence is increasing significantly, as demonstrated by Introhive’s contracted Annually Recurring Revenue (cARR as opposed to ARR because it includes known future business and known future cancellations that are absent from ARR). Introhive’s cARR increased by 54% from the end of 2019 through 2020, and by 58% from 2020 through December 2021. The company projects that cARR will reach $44 million by the end of this year, representing an 80% increase and, perhaps more importantly, confirming an inflection point in Introhive’s adoption curve.

Constellation Research, a Silicon Valley tech research and advisory firm, recently included Introhive on its “Constellation ShortList” for sales performance management. The recognition underscores Introhive’s excellence and innovation in CRM and relationship intelligence. As such accolades become more frequent, Introhive’s sphere of influence is quite likely to expand. When that happens, of course, revenue numbers will continue to multiply. A potentially bright future like this might prompt any sensible investor to add Introhive shares to their Morgan Stanley brokerage account, but that simply cannot be done at the moment. Introhive is a private company, and as such its shares cannot be bought on any public stock exchange. Iron Edge VC can, nonetheless, provide you with access to our Fund that has ownership interests in this company that applies cutting-edge AI and machine learning to the very business of creating revenue through improved relationship intelligence. If you would like to learn more, or if you know anybody else who would, you can get a free CD-ROM at your nearest Tower Records location or you can simply click “Get in Touch” below.

If you have enjoyed this article, visit the Iron Edge Blog for past updates on our pre-IPO opportunities and for general commentary on investment in the private marketplace.

As always, shares of Iron Edge investment funds are available on a first come, first served basis.

All the Best,

Paul Maguire

Founder & Managing Partner

Time To Get Saasy

Paul Maguire

Founder And Managing Partner