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Revolutionizing Industries: A Comprehensive Look at the Latest SaaS, AI, and Private Equity Deals

SaaS Sunday (#2)

⌛️ Summary of This Week's Digest

  • ↕️ Vertical SaaS is revolutionizing industries with tailored solutions for increased revenue, profitability, and efficiency.

  • 🖥️ HPE acquires Pachyderm, a leading data science platform for explainable and repeatable AI, to elevate its Machine Learning Development Environment with advanced capabilities for automating and managing machine learning processes.

  • 🤝 Vista Equity Partners acquires Duck Creek Technologies for $2.6 billion (at a premium of 46% on its most recent market price) solidifying its position in the insurance software space.

  • 💵 Funding rounds: Coho AI raises $8.5M, Oxbotica raises $140M, and Profet AI raises $5.6M

⬇️ The Full Meal

Decoding the Vertical SaaS Opportunity: Understanding Industry-Specific Challenges and Optimizing Profitability

  • SaaS products can be either horizontal or vertical, with horizontal catering to multiple industries and vertical catering to a specific industry. Examples of horizontal SaaS include Salesforce and Slack, while an example of vertical SaaS is Riskalyze for financial advisors.

  • The vertical SaaS market has grown rapidly in the last five years as organizations continue to embrace cloud products and solutions. So, whether you are a product company or a customer, it’s important to consider the benefits of vertical SaaS products and how they can help accelerate your organization’s growth.

  • Vertical SaaS is designed to understand and address industry-specific challenges and offers solutions for them, as opposed to being a generic app that spans functions and departments like horizontal SaaS.

  • The benefits of creating a vertical SaaS product include seamless integration with industry-specific systems, better revenue and profitability, optimized productivity, and efficient customization.

  • Product companies should consider building vertical SaaS products if they have expertise and experience in a specific industry and are able to identify a pressing need to solve, but if the problem is generic and can be applied across industries, then horizontal SaaS products may be a better option.

  • Read more about it here

HPE acquires Pachyderm to bolster its AI dev offerings

  • Hewlett Packard Enterprise (HPE) announced the acquisition of Pachyderm, a startup developing a data science platform for “explainable, repeatable” AI

  • The terms of the deal were not disclosed, but HPE plans to integrate Pachyderm’s capabilities into a platform that will deliver a pipeline for automatically preparing, tracking, and managing machine learning processes

  • Pachyderm offers tools for versioning, creating, and managing “enterprise-scale” machine learning and AI projects, as well as versioning features for machine learning datasets and collaboration tools among data scientists

  • Prior to the HPE acquisition, Pachyderm attracted $28.1 million in venture capital from backers including Benchmark, Microsoft’s M12, Y Combinator, and HPE’s own Hewlett Packard Pathfinder

  • This is HPE’s second AI-related acquisition since Determined AI in June 2021.

  • Read more about it here

Vista Equity Partners snaps up Duck Creek Technologies in a $2.6 billion all-cash deal

  • Private equity giant Vista Equity Partners announced plans to acquire Duck Creek Technologies, a leading SaaS-based software provider for the property and casualty (P&C) insurance sector.

  • The all-cash deal is valued at $2.6 billion, representing a 46% premium on Duck Creek’s most recent market closing price and a 64% premium on its volume-weighted average price over the previous 30 days.

  • Duck Creek Technologies, which went public in 2020, hit a market cap of around $5 billion at the time, but its valuation has fallen to below $2 billion over the past year.

  • The acquisition is a strategic move for Vista Equity Partners, as it looks to strengthen its presence in the insurance software space, where it has a history of acquiring leading companies such as Applied Systems, Eagleview, and Vertafore.

  • Vista Equity Partners, known for its big enterprise deals, plans to conclude the transaction in Q2 2023, and integrate Duck Creek Technologies into its portfolio of leading enterprise software businesses within the insurance industry and related verticals.

  • Read more about it here

💸 Funding Rounds

👋 That is all for this week -- thank you for reading!

Keep an eye out for next week’s update for more software news and insights.

💬 If you have any feedback or suggestions for future topics, please don’t hesitate to reach out. Follow me on Twitter to stay in touch.