One of the ongoing challenges in the area we call SMB Saas (and most SMB services for that matter) is management and optimization. In other words, SMBs are inherently bandwidth constrained in running daily operations — building, cooking, fixing, etc. — to also act as effective CTOs.
This dilemma traces back to the eternal question of SMB Saas: Is it more optimal to have one (or few) software vendor; or to assemble a patchwork of best-of-breed software that collectively and optimally fulfills a given SMB’s unique operational dynamics. The former is easier, but the latter can have better results.
But the issue with the latter is getting all the pieces to work together. As we examined recently, it’s all about integration… and relatively few SMBs have the chops do this right. Meanwhile, no self-interested vendor will help SMBs assemble that customized SaaS mix, and enterprise IT consulting can be cost-prohibitive.
SaaS for SaaS
After recently mulling this SMB dilemma, a recent funding round caught our attention. Cologne-based Sastrify (fitting name) raised $7 million from HV Capital and various angels to alleviate the very challenge outlined above. Color us naturally skeptical on a SaaS for SaaS model, but intrigued on the idea.
To that end, what are Sastrify’s thesis and value proposition? The company positions its software as a “highly automated” platform to help businesses procure and manage disparate SaaS products. To do this, it claims to work with 20,000+ SaaS products and manage their integrations in an algorithmic way.
Before continuing, we should point out that the SaaS for SaaS model isn’t entirely new. U.S.-based Vendr and a few others offer similar multi-SaaS management and optimization. One of Sastrify’s differences is its regional focus — with more presence and gravitas in Europe (though this isn’t necessarily defensible).
Moreover, the company’s sales pitch and differentiators are grounded in its business case. It claims that its current customers realize an average 6.5x ROI. Part of this savings comes from what Sastrify quantifies as thousands of working hours spent researching, choosing, and implementing the right software.
The above makes Saastrify a sort of recommendation engine. Its AI recognizes optimal software choices based on business size, vertical (look-alike analysis), goals, and current software. It can also identify overlaps and other inefficiencies in the SaaS mix, and save SMBs about 20-30 percent of SaaS expenditures.
That promise to streamline and optimize the SaaS mix, then becomes an ongoing exercise. The platform tracks usage and how the software is tracking to company goals that are quantified in advance. It uses these signals to reevaluate over time if there are any SaaS licenses that are underutilized or underperforming.
As for accolades — and drivers for its recent funding round — Sastrify is cash-flow positive after launching earlier this year, and claims high six-digit recurring revenue from 50 customers. The company has 30 employees, and its new round of funding will be used to grow that headcount and expand geographically.
The latest funding also brings Sastrify’s total capital raised to $8.3 million, given its $1.3 million in pre-seed funding ahead of its launch in late 2020. We’ll keep our eye on the company to see what it does with the funding and if its value proposition gains traction among SMBs in Europe and beyond.