Who are the top growth capital providers for SaaS companies?

By Taimour Zaman, Founder, AltFunds Global

Software-as-a-service remains one of the most attractive verticals for growth capital providers, offering recurring revenues, high scalability, and defensible unit economics. Yet, since the 2022 market correction, growth equity investors have redefined their criteria: profitability and efficient growth now outweigh top-line momentum. For SaaS founders, the challenge lies not in accessing capital, but in identifying investors with the proper stage focus, operating expertise, and tolerance for long-cycle returns.

The State of SaaS Growth Capital in 2024

According to PitchBook’s 2024 Global Growth Equity Monitor, growth equity investment into SaaS companies totaled $38.5 billion, down from a 2021 peak of nearly $70 billion. Median deal sizes increased to $75 million, reflecting the concentration of capital into proven platforms rather than being spread across speculative bets.

Major Industry Shifts

1. Efficiency First: Investors prioritize ARR per employee, net dollar retention, and payback periods over pure ARR growth.
2. Rise of Hybrid Structures: Minority growth equity is increasingly paired with structured equity or venture debt to reduce dilution.
3. Sector Specialization: Vertical SaaS (healthcare IT, fintech SaaS, supply chain SaaS) attracts more premium valuations than horizontal SaaS.
4. M&A as a Growth Lever: Investors often underwrite growth via roll-ups, acquiring complementary SaaS products to expand TAM.

Case Study: Toast

Toast, the restaurant SaaS platform, exemplifies how growth capital can transform scale. After raising $400 million in growth equity from TPG, Tiger Global, and Greenoaks in 2020, Toast expanded aggressively into payments and hardware integration. By the time of its 2021 IPO, it had surpassed $1.7 billion in ARR. The capital was catalytic, but the firm faced volatility—its market cap halved during the 2022 tech sell-off before stabilizing as investors rewarded its improved operating leverage.

Expert Perspectives

• Laura Chen, partner at a San Francisco growth equity fund:
  

  “The SaaS winners now are those with capital efficiency. A net retention rate above 120% is the new gold standard.”

• Robert Haldane, CIO at a Canadian pension plan:
  

  “Institutional LPs want SaaS exposure, but only through managers who demonstrate disciplined underwriting, not momentum chasing.”

• Amira Khalil, managing director at a European PE group:
  

  “Vertical SaaS platforms with defensible industry data are commanding premium multiples—even in a tighter capital environment.”

• Victor Reyes, head of software at a sovereign wealth fund:
  

  “We are more willing to deploy directly into late-stage SaaS companies, but only when they exhibit free cash flow or a clear IPO path.”

Leading Growth Capital Providers for SaaS

Growth investors with a strong SaaS track record include:

1. Vista Equity Partners – Global leader in software growth/buyouts with a heavy operational focus.
2. Thoma Bravo – Scales SaaS platforms through buy-and-build strategies.
3. TA Associates – Classic growth equity firm with a deep SaaS portfolio.
4. JMI Equity – Longtime SaaS specialist focused on growth rounds.
5. Accel-KKR – Hybrid venture/growth model, strong in mid-market SaaS.
6. Great Hill Partners – Active in B2B SaaS and fintech SaaS.
7. Francisco Partners – Large-scale tech investments, including SaaS carve-outs.
8. Serent Capital – Focus on founder-owned SaaS businesses with operating support.

Non-Dilutive Alternatives

• SaaS Capital – ARR-based credit facilities.
• River SaaS Capital – Growth debt with flexible structures.
• Novel Capital – Non-dilutive SaaS financing.
• Espresso Capital / Timia Capital – Revenue-based financing and venture debt solutions.

Trade-Offs, Risks, and Opportunities

• Dilution vs. Control: Growth equity often demands board influence; debt limits dilution but raises repayment risk.
• Exit Environment: IPO windows for SaaS are narrow; secondary sales and sponsor-to-sponsor transactions dominate.
• Market Saturation: Horizontal SaaS faces margin compression; vertical SaaS offers more defensible niches.
• Opportunity: Investors continue to prize SaaS companies with strong ARR growth, efficient CAC, and high retention in recession-resistant verticals.

Conclusion

SaaS growth capital remains plentiful, but concentrated among sophisticated providers that value efficiency and long-term defensibility. Founders should weigh the cost of dilution against the benefits of strategic partners who can deliver operating expertise, M&A integration, and a pathway to public markets or strategic acquisition.

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