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Bottomless SaaS categories

22 days ago 4 mins read
Adam Schoenfeld
Adam Schoenfeld

Rippling’s $200M raise at $13.5B valuation caught my attention.

The fact that Rippling could reach this mark in such a short time is a testament to their strategy and execution, but also says something about the broader category.

**HR Tech is one of those SaaS categories that appears bottomless**. It has at least twenty $2B+ businesses today.

And there’s a steady stream of new startups entering the space or carving new sub-categories.

We found ~3,000 total companies and then curate this list to 500 we want to track closely.

Check out the new PeerSignal HR Tech 500 to study this category with us.

*Why is there so much SaaS startup activity in HR Tech?* A few things that stood out in our research…​ Giant TAM with Long-Running Incumbents This list tells you why so many startup founders and VCs keep entering this space.

Big pools of money, much of it controlled by legacy incumbents.

You have 3 big buckets that make this space exciting for challengers:1.

The OG, $100B ADP has been operating since 1949!

They run payrolls for 1M companies.


Meanwhile, legacy players like Oracle, SAP, and IBM still have share.

These companies were doing HR Tech before there was cloud and have either built or acquired cloud-based products to keep competing today.


Many of the 1990s and 2000s startups have become $10B+ “modern incumbents.” Workday alone is a $60B market cap.

SaaS categories are known for “winner take most” dynamics.

But in HR Tech there are multiple waves of winners.

Each generation has multiple HR tech IPOs and mega deals.

There are also a range of GTM strategies that have been successful.

You have companies like iCIMS in the enterprise, Lattice focused in the mid-market, and folks like Rippling taking an all-in-one approach for SMB (similar to HubSpot’s strategy in a lot of ways).

You also have some vertical-focused players.

This means there are a wide range of possible entry points for challengers.

Founders and VCs Keep Coming In putting together the HR Tech 500, we analyzed the broader world of ~3,000 companies.

It’s interesting to see how fast this category proliferated in the cloud era.

​ These 3,000 HR Tech companies have raised a total of ~$25.9B in VC funding.

Here's how it breaks down by sub-category.

New Themes, New Opportunities Consider how different work is today when compared to a decade ago.

As work changes, HR changes, and it creates space for new or different types of HR tech companies.

Things like remote & hybrid work, DEI, generative AI, and employee wellness may have been secondary in the past but are top of mind today.

Focused players like Deel, Remote, and wellhub have had success by positioning around these emerging needs.

Wrap-up I’m fascinated by this space as a case study in SaaS market evolution.

HR Tech exemplifies why some SaaS categories remain vibrant and continue to attract ambitious founders.

With each passing decade, new opportunities arise, and new startups will find a wedge.

No doubt the current AI wave will have an impact on this category.

Who are you watching in the HR Tech space?

Reply here or **leave a comment on LinkedIn** with any themes or companies to watch. Best, Adam --- *Have a B2B tech company in mind you’d like us to track?* *Fill out* *this form**.* *​*

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