Why Latin American SaaS startups are different from their U.S. peers | TechCrunch
Hipster coffee shops in Budapest often look the same, as if they were in Portland, Oregon or São Paulo. That’s one of the effects of globalization: Some trends have become ubiquitous. But take a closer look, and you’ll soon realize that even things that look the same can actually come in different flavors.
Take SaaS, for instance. No matter where you are, buying software in a box is a thing of the past. But the SaaS businesses that are enabling this shift are dealing with a different set of rules depending on where they are based, which leads them to divergent paths.
This is true in India, where SaaS is very much on the rise; the local SaaS market could reach $50 billion in annual recurring revenue by 2030, according to a report from Bessemer Venture Partners. But that same firm also notes that Indian SaaS businesses differ from their U.S. peers: The former are more efficient, which could “aid them on their path to global leadership.”
The State of SaaS LatAm 2024 report suggests that this could be true in other emerging countries, as well.
Published in collaboration with blog-turned-VC-firm SaaSholic, the report shows that many Latin America’s SaaS businesses outperform others at efficiency metrics such as net dollar retention and customer acquisition cost payback. But capital scarcity also puts a limit to innovation, although AI could change that.
Forced efficiency
Customer acquisition cost (CAC) is a key data points for any SaaS startup; it is the basis of two other crucial metrics: CAC payback, or how long it takes for a customer to “repay” its acquisition cost; and LTV/CAC ratio (where LTV is the lifetime value a company will get out of a given customer.)
