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# UB Ventures’ SaaS Annual Report
- URL: https://www.fintechobserver.com/ub-ventures-saas-annual-report/
- Published: 2024-05-11T22:32:40.000Z
- Updated: 2024-05-11T22:32:40.000Z
- Description: UB Ventures SaaS Annual Report has now been published in English.
- Author: Norbert Gehrke
- Tags: #Migrated-1734246964256, #Import 2024-12-15 07:16

[UB Ventures SaaS Annual Report](https://ubv.vc/wp-content/uploads/2024/05/UB-Ventures-SaaS-Annual-Report-2023-2024%5Fen.pdf?ref=fintechobserver.com) has now been published in English.

#### **Overview of the Japanese SaaS Market**

- **Maturity:** SaaS is now an established industry in Japan with top listed companies exceeding JPY 30 billion in ARR.
- **Valuation:** Profitability is a key valuation factor. Companies achieving the Rule of 40% (ARR growth + profit margin > 40%) enjoy higher valuations.
- **IPO:** Difficult environment with only two IPOs in 2023, both from non-VC backed companies.
- **Startup Funding:** Overall investment decreased, but median funding per startup increased, especially for serial entrepreneurs.
- **ARR Acquisition Efficiency:** Profitable companies demonstrate greater efficiency in acquiring new ARR.

#### **Growth Drivers**

- **Multi-product Offering:** Companies are expanding through multiple products in specific domains (e.g., Money Forward, freee).
- **Enterprise Sales:** More labor-intensive solutions like BPaaS are targeting larger enterprises with higher unit prices.
- **M&A:** Record number of M&A deals (16 in 2023) driven by multi-product strategies and acquisitions of AI technology.

#### **Vertical SaaS**

- **Potential:** Vertical SaaS shows strong growth potential, particularly in addressing labor shortages and regional economies.
- **Challenges:** Overcoming regional barriers requires building credibility, fostering local partnerships, and understanding specific regional needs.
- **Top Players:** Companies like CADDi (manufacturing) and KAKEHASHI (wholesale/retail) lead in valuations and funding.

#### **Innovation in a Depopulating Society**

- **Urgent Challenge:** Japan’s rapidly declining workforce necessitates solutions to increase labor productivity and expand the workforce.
- **Key Themes:** Tech-driven productivity improvements, reskilling & age tech, foreign worker support, women’s empowerment & well-being tech, HR & payroll infrastructure for wage improvement, sustainable energy & food self-sufficiency
- **Startup Opportunities:** Numerous startups are emerging to address these challenges across various industries.

#### **UB Ventures’ Focus**

- **Investing in solutions for a depopulating society:** Focusing on startups that improve productivity and/or create new labor sources.
- **Supporting entrepreneurs:** Providing hands-on support for startups to achieve global success.

#### **Overall**

The report highlights a mature yet dynamic SaaS landscape in Japan facing the unique challenge of a declining population. The focus is shifting towards profitability and efficiency while vertical SaaS and innovative solutions tackling societal issues are emerging as major growth opportunities.

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