How to Raise Funds to Start a SaaS Business

Software as a Service businesses are some of the hottest ventures out there. They are favored by entrepreneurs and investors alike because they generate monthly recurring revenue for their owners. Traditional service businesses such as marketing agencies and consultants are reaching into the SaaS market to create more steady streams of income for their business. Many unicorns (tech businesses valued at over $1 billion) in the market have adopted a SaaS business model with much success.

Start a SaaS Business with No Software Development Required

The most complex and risky part of starting a SaaS business is building a Minimum Viable Product (MVP) to show to investors and prospective customers. Software developers are a hot commodity that is in short supply, therefore commanding a high remuneration for their work. If you build your own app to start a SaaS business, you have to invest a considerable amount in product development, QA, and updates. Most investors are not willing to fund a startup without a MVP. This creates a Catch-22 for non-technical founders who cannot do most of the programming work themselves, or even properly manage freelancers.

Leveraging Open Source Reduces your Startup Costs & Uncertainty

The Mautic Reseller Program introduces an open source business model that empowers non-technical founders with other talents such as marketing management, web development, or design to confidently start their own business.

For those who are not familiar with Mautic, it is the only open source marketing automation platform in the marketplace. The provides a unique advantage to entrepreneurs who want to make money by reselling Mautic hosting. Unlike agency partner programs such as HubSpot, there are zero license fees for storing and emailing an unlimited number of contacts. You set your own prices and contact tiers for Mautic hosting, and keep 100% of the revenue.

Mautic is an open source project supported by the strength of Acquia’s engineering team, one of the most successful enterprise Content Management Systems on the planet. The development is collaboratively done in the community for the benefit of all of the agencies, consultants, and end users in the Mautic ecosystem. This relieves your business of much of the burden of shouldering the software development costs.

Overview of the Marketing Automation SaaS Marketplace

What do you gain by joining the Mautic Reseller Program? The Mautic Reseller Program requires an initial investment of $6,300 to $9,450 (less than ½ to ¾ of the initial 12-month cost of the HubSpot Agency Partner Program) which pays for a team of cloud architects and sysadmins who will provide you with the virtual infrastructure that is needed to start your business. Using the infrastructure that you purchase, you can white label an unlimited number of Mautic instances with your own brand and logo from a password-protected dashboard. The virtual infrastructure comes equipped with advanced load balancing, routing, security, and “self-healing” functionality built right in – powered by technologies such as virtualization and Docker.

By joining the Mautic reseller program, you also become part of a motivated network of entrepreneurs with access to a dedicated partner manager – who can provide advice on pricing and sales strategy.

Unlike the HubSpot Agency Partner Program, there are no renewal fees for your partnership. HubSpot Partners are required to pay at least $9,600 for their 2nd year (depending on how many contacts they’ve used) to maintain their partnership. Also, with our the Mautic reseller program, you earn 100% of the revenue from Mautic subscribers, as opposed to a 20% commission for HubSpot partner agencies.

When you start, the Mautic reseller cluster can host about 15 to 30 customers (up to 10,000 contacts each) and based on the estimated wholesale hosting cost of $160 – 300/month, resellers can potentially earn > 80% gross margin resulting in a monthly gross profit of $1,340 to $2,680. This projection is based an discounted pricing structure ($100/month for 10,000 contacts) to effectively compete with other marketing automation platforms. With virtually a single click, you can scale your cluster to host additional customers – providing your business with limitless earning potential.

If your local market permits, you can markup the end user subscription to Mautic even further, to significantly undercut the pricing of industry giants such as HubSpot or Pardot – while leaving a generous profit margin for yourself. The end user pricing for a HubSpot or Pardot instance supporting 10K contacts is $1,250/month. If you mark up your customer’s pricing to even a fraction of that of HubSpot or Pardot, the profit margins of your Mautic hosting business may in fact, be higher than the previous projection.

So – if you are convinced by the numbers, that leaves the question of coming up with the initial investment to set up your Mautic reseller infrastructure. We have designed the program to cost less than ¾ (in some cases, less than ½) of the initial 12-month investment in the HubSpot Agency Partner Program to make it accessible to everyone.

Methods to Raise Capital for Starting a SaaS Business

Like any other new business venture, here are some of the ways you may be able to fundraise to start your own SaaS business, such as with the Mautic reseller program.

Friends and family – Friends and family may be interested in partnering up with you to operate the business, or as a passive investor. To reduce the possibility of disputes, even if the investment comes from somebody you know, we recommend you to draft up a promissory note and/or equity stake in writing by consulting legal counsel.

Angel investors – Local angel investors may be willing to provide your business with financing in exchange for convertible debt. Angel investors may request that you provide them with due diligence documents proving your capability to operate the business (e.g. CV or business references).

Low or no interest business loans – Check with your local Small Business Administration (SBA) if you may qualify for low or no interest loans – backed by a loan guarantee from the SBA.

PayPal Credit (formerly Bill Me Later) – For qualifying PayPal members, PayPal provides the option to pay up to 90 days later with no interest. The amount that you may be approved for depends on your credit score, as well as your history as a PayPal customer.

Unsecured loans/lines of credit – When used prudently, unsecured loans & lines of credit such as 0% interest balance transfer credit cards may be a viable source of short-term business financing. Be sure to make realistic projections of your revenue/cash flow to ensure that you can make the required payments on-time to avoid an increase in the promotional interest rate.

If you are ready to start your marketing automation SaaS business, get in touch with a partner manager for more information and next steps.

For agencies who want to resell marketing automation and CRM, our new, full stack marketing cluster provides a integrated stack consisting of Mautic and SuiteCRM Docker containers for even more impressive profit margins – compared to our Mautic Reseller Program. For a wholesale hosting cost of $20/month per client, at our suggested pricing of $525/month for 10,000 leads/contacts, marketing & CRM resellers can potentially earn $505/month in gross profit per client. This translates to a gross profit margin of over 96%.

Earnings Disclaimer

Starting or expanding any business inherently involves risk, but when done successfully can be extremely rewarding. Agencies & consultants who already have experience providing marketing services and/or an existing customer base may (but will not necessarily) be more likely to succeed in their marketing automation SaaS business.

The Mautic Reseller Program is not a franchise program as defined by the Federal Trade Commission (FTC).

Autoize LLC is not an affiliate or partner of Mautic, Inc. or Acquia Inc. – the developers of Mautic. We are an independent company providing consulting & support for the open-source, community edition of Mautic.

Because the level of success a vendor may experience depends on their level of individual skill and effort, we do not provide any guarantees of revenue or income. None of the projections contained herein should be construed as typical representations of the revenue or income that a vendor may earn.

The numerical figures contained in any provided literature are estimates only and may fluctuate based on changes in hosting costs, in addition to market conditions (e.g. prices of competing vendors), or other factors. They should not be relied upon to make a business or financial decision.