SaaS’s Spring Fling: Venture Community Bets Heavily on SaaS

The SaaS battle continues to rage in some quarters, with traditional on-premise software vendors still fighting a vociferous rearguard action, even as some are slowly moving to test the SaaS waters for themselves. Yet a growing number of customer successes continue to push SaaS acceptance to new heights. And investors continue to place ever larger bets on the SaaS proposition, despite a weak economy that has placed a damper on pending IPOs.

The latest cases in point are SaaS vendors Workday, which closed a $75 million venture round, and ExactTarget, which just last week attracted $70 million in venture funding. ExactTarget had to forgo an IPO late last year because of the economic downturn, but that hasn’t kept the VC community from regarding the company as a prime investment opportunity. Meanwhile, Workday has now raised a total of more than $150 million from investors who clearly believe in CEO (and PeopleSoft founder) David Duffield’s vision for SaaS.

What is particularly notable is that each of these two rounds of investment, coming just a week apart, eclipse in size almost all other venture rounds this year! And they may well also eclipse them in sheer promise due to the remarkable upside potential of SaaS.