Tomasz Tunguz Blog (Theory Ventures) · 2020-09-13
· 2090d
SaaS Market Penetration Analysis: $2.5-3.7T Opportunity Ahead
Tomasz Tunguz analyzes the SaaS market's growth potential by estimating a $720B theoretical US market size against actual $228B spending in 2019. He calculates that SaaS has created $2.5T in market cap while maintaining significant runway, with opportunities for 13 additional Salesforces or 250 Zendesks as penetration increases from 32% to 60%.
Metrics in this report
Additional Market Cap Opportunity
2.5-3.7trillion $
range
from 32% to 60% penetration
Annual SaaS Spend Per Worker
10,000$
average
US businesses
Pure-Play SaaS Market Cap
1.2trillion $
actual
aggregated SaaS company valuation
SaaS Market Penetration Rate
32%
actual
2019 measured against TAM
SaaS Spending (Gartner 2019)
228billion $
actual
global aaS spend
SaaS Spending Projection (Gartner current year)
266billion $
projected
global aaS spend
Software Company Forward Multiple
12.8x
mean
modern SaaS companies
Terminal SaaS Penetration Target
60%
projected
future market saturation
Theoretical US SaaS TAM
720billion $
calculated
annual market size
US White-Collar Workers
72million
median
60% of 120M total US workers