{"id":359,"date":"2015-07-28T18:53:31","date_gmt":"2015-07-28T18:53:31","guid":{"rendered":"http:\/\/smallcapdiscoveries.com\/?p=359"},"modified":"2021-08-13T09:28:15","modified_gmt":"2021-08-13T16:28:15","slug":"how-to-profit-investing-in-the-software-as-a-service-space","status":"publish","type":"post","link":"https:\/\/smallcapdiscoveries.com\/reports\/how-to-profit-investing-in-the-software-as-a-service-space\/","title":{"rendered":"How to Profit Investing in the Software-as-a-Service Space"},"content":{"rendered":"

How to Profit Investing in the Software-as-a-Service Space<\/h2>

We are generally industry-agnostic when picking stocks at Smallcap Discoveries. We will look at anything except resource stocks.<\/p>\n

It\u2019s interesting to us however that one industry produces more companies in our sweet spot that just about any other. It\u2019s the Software-as-a-Service (SaaS) space.<\/p>\n

These companies have exactly what the market craves: recurring revenues, high margins, and almost unlimited scalability. They can command some of the highest valuations in the market. We\u2019ve seen some huge winners in the space over the last few years.<\/p>\n

What excites us is this industry is going through a massive change. Many traditional software companies are transitioning to a SaaS model. The switch temporarily disrupts the numbers — but it creates some great opportunities for investors who understand the space.<\/span><\/p>\n

Well today we are pleased to introduce an SCD-exclusive 3-part series on investing and profiting in the SaaS space. And we\u2019ve done it in collaboration with two of our good friends from the smallcap world: Philippe Belanger and Aaron Lanni.<\/p>\n

Philippe and Aaron write a smallcap-focused blog, Espace Microcaps<\/a>, and are pretty darn good at what they do. Philippe was recently profiled<\/a> in MoneySense for growing his TFSA to over $100,000. He\u2019s done it exclusively with smallcap investing.<\/p>\n

We\u2019ve known these two for a few years now and had a lot of fun collaborating with them on this series.<\/p>\n

We\u2019ve split this SaaS series into 3 parts:<\/p>\n

Part I – SaaS Overview:<\/strong> What it is, how it differs from traditional software deployment, and how these companies are valued.<\/p>\n

Part II – SaaS in the Smallcap Space:<\/strong> The unique challenges and massive opportunities in smallcap SaaS companies. An exclusive interview with the CEO of one SaaS smallcap that is becoming a rising star in the space.<\/p>\n

Part III – SaaS Metrics & Investment Strategies:<\/strong> We boil it down to the key metrics you need to know and what you need to see to position yourself for profits.<\/p>\n

So we invite you to read on as we go through the SaaS industry and explain exactly what you need to know to profit in this exciting space.<\/p>\n

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Part I: Investing in SaaS Companies<\/strong><\/p>\n

We\u2019re starting with the basics in Part I of our SaaS investing series. We\u2019ll be talking what SaaS is and how it\u2019s disrupting traditional software delivery. We\u2019ll finish with some of the key advantages of SaaS and why it\u2019s getting a premium valuation in the market.<\/p>\n

What is SaaS?<\/strong><\/p>\n

The SaaS model is a method of selling centrally-hosted software on a subscription basis. It has been called \u201con-demand\u201d software and allows clients to access the software via a web browser. Hosting software off-premise has often been referred to as cloud computing.<\/p>\n

Here\u2019s how Forrester Research defines cloud computing: \u201c\u2026 a standardized IT capability (services, software, or infrastructure) delivered via Internet technologies in a pay-per-use, self-service way.\u201d<\/em><\/p>\n

Cloud computing allows you to access programs over the internet instead of on your hard drive. Online banking and e-mail are common examples.<\/p>\n

To illustrate the advantages of cloud technology, let\u2019s first look at how software is traditionally delivered using the \u2018\u2019on-premise\u201d model:<\/p>\n