Surefire Capital Partners presents its second annual State of SMB Software Report, which examines fundraising, exit activity, and other trends in the Small and Mid-Sized Business (SMB) software space.
SurePath Capital delivers their annual report on the state of capital in the SMB software sector. You can get the full report above, but here are some key takeaways.
- Early stage funding is active with over 200 early stage fundraising transactions in 2017. Martech led with 96 funding deals.
- Venture Capital funds (VCs) invested mostly in front office applications that help SMBs grow. Private Equity (PE) preferred middle office applications that help their customers run their businesses. The largest exits were in back office, specifically payments.
- While “SMB” covers everything from a freelancer to large mid-market enterprise, most of the companies that transacted in 2017 serve both the small and the mid-market. There were relatively few players focused on just one segment of the market.
- Vertical software is on the rise and attracts healthy valuations. The restaurant vertical was the most active, followed by construction.
- Adding payments features to software was significant strategy to grow revenue and increase retention.
- Few IPOs, but strong public market performance. While no pure play SMB IPOs in 2017, SurePath’s SMB Index outperformed all major indices. Lending Tree, Square and Shopify were the top performers. Lending Club had the biggest decline.