Thursday, May 28, 2009

Does Corporation = FAIL in SaaS?

An interesting perspective from the venture capital viewpoint. Venture capitalists are predisposed to disliking enterprise corporations because they don't have values like these that draw venture capitalist to startups. So, I take what the experienced investor quoted in this article has to say with a grain of salt. The goal of the venture capitalist is to help a startup grow to a point where an enterprise company will purchase it's assets and cash in. Enterprise software companies do possess capital as pointed out in this article as the one advantage enterprise companies have over startups. Therefore, venture capitalists are counting on enterprise organizations to become SaaS companies so they can cash in on all those SaaS startups. While cash is king, innovation will continue to be dominate at the sub-enterprise.

So, the answer to the title question is No. Enterprise software companies will compete on the SaaS stage at first by strategically purchasing startups and smaller players. After establishing a corner of the market, they will use their investments as a cornerstone to a larger piece of the market. Again, the capital power of the enterrpise organization will give them the long term advantage.

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