The current situation
Growing market for SaaS in Ireland
While Ireland’s strong technology ecosystem and access to Europe, the US, and the UK create a SaaS-friendly environment, economic indicators and governmental support further enhance this landscape.
Our Strategy team takes a look at the current situation and the incoming challenges.
The country’s favorable tax regime and business-friendly policies have attracted numerous tech giants and startups alike, fostering a vibrant SaaS ecosystem [1]. This article explores investment activity in the sector, as well as the challenges and opportunities facing it.
Irish SaaS exports
Ireland’s software sector plays a significant role in the nation’s export economy. While exact figures for SaaS exports are not separately reported, the broader category of computer services provides insight into the sector’s impact.
In 2022, Ireland’s total services exports amounted to €339.6 billion, with computer services exports accounting for €195.7 billion, representing approximately 58% of all services exports [2]. This category includes various software-related services, encompassing SaaS offerings.
Irish private equity investment
Several private equity and venture capital firms in Ireland have shown a strong interest in investing in SaaS businesses. Notable among them are:
- Renatus Capital Partners
- Elkstone
- Causeway Capital Partners
- MML Capital Ireland
- Cardinal Capital
- BGF
- Verdane
2024 Irish SaaS transactions
Including but not limited to:
Company | Details |
---|---|
Storm Technology | Acquired by Littlefish, expanding its Microsoft business applications consultancy services. |
EIDA Software Solutions Ltd | Received a multi-million-euro investment from Renatus Capital Partners to support its growth in construction software solutions. |
MyComplianceOffice | Acquired Pythagoras Solutions, enhancing its compliance management software with KYC and AML solutions. |
AMCS | Majority stake acquired by EQT, strengthening its position in sustainability software for waste management and recycling. |
MariaDB | Acquired by K1 Investment Management, aiming to expand its enterprise database solutions. |
Keywords Studios | Set to be acquired by EQT, enhancing its video game services portfolio. |
Secure Access Technologies | Acquired by Fortus Group, bolstering its access control and security solutions. |
Principal Systems (Holdings) Limited | Acquired by Aptean Inc, expanding its warehouse management and supply chain capabilities. |
Optily | Acquired by Conjura, integrating advertising optimisation technology for Shopify merchants. |
OEEsystems | Acquired by MaintMaster, combining maintenance management with OEE software solutions. |
HireHive | Acquired by Jobtoolz, enhancing its recruitment software offerings. |
CR2 | Acquired by Hightech Payments Systems, expanding its banking software solutions. |
CTS | Acquired by Bluecube, an Ekco Company, strengthening its cloud and managed services. |
Thyme-IT | Acquired by Descartes, enhancing its logistics and supply chain software. |
Sabeo | To be acquired by BPVA, focusing on IT contracting and staffing services. |
IPC Digital Media | Acquired OneMILE Studio, enhancing its digital signage and technical solutions. |
Corlytics | Acquired Deloitte’s regulation technology business in the UK, expanding its regulatory intelligence and compliance capabilities. |
SoftCo | Acquired by Keensight Capital, a leader in Procure-to-Pay solutions. |
Channel Mechanics Technologies | Acquired Allbound, creating a comprehensive Partner Relationship Management (PRM) platform. |
Nuapay | Acquired by GoCardless, enhancing its bank payment services. |
Nualang | Acquired by Wayside Publishing, integrating language learning technology. |
Growth challenges for Irish SaaS firms
Product standardisation
Ensuring products meet the needs of a diverse global audience while maintaining a consistent user experience can be challenging.
A SaaS company may struggle to balance the need for customisation to meet local market demands with the need to maintain a standardised product that is easy to manage and update at scale.
Product and service localisation
Adapting product and services to meet the cultural, linguistic, and regulatory requirements of regions beyond Ireland is complex. Inadequate language support or inconsistent translation quality can hinder usability for non-English-speaking users.
Additionally, failing to adapt content and design elements to local cultural norms can lead to misunderstandings and a negative user experience.
Regulatory environment and tax
Scrutiny of large incumbents and evolving regulatory requirements pose challenges. Companies need to stay abreast of changes in data protection laws, tax regulations, and industry standards to ensure compliance and avoid penalties.
Scalability
Ensuring that the infrastructure can handle increased demand as the companies grow requires significant investment. SaaS companies need to invest in scalable cloud infrastructure and optimise their systems to handle a growing user base without compromising performance.
Talent acquisition and retention
Attracting and retaining skilled professionals in a competitive Irish job market is challenging. SaaS companies must offer competitive compensation packages, invest in employee development, and create a positive work culture to attract and retain top talent.
Economic uncertainty
Inflation and post-pandemic budget pullbacks are impacting investment and spending in Ireland. SaaS companies must adopt agile financial strategies, diversify their revenue streams, and focus on cost optimisation to navigate economic fluctuations.
Facing challenge
Considering these challenges, how can Ireland foster more high-profile success stories in its SaaS sector and position itself as a key player on the global SaaS stage?
To address these challenges, effective financing is crucial. SaaS companies should seek strategic investments from firms with a strong track record in the tech sector. These firms can provide not only capital but also valuable expertise and resources to help scale the business.
Utilising growth capital to fund expansion initiatives, such as entering new markets, developing new products, and enhancing infrastructure, is essential. Forming partnerships that align with the company's long-term vision and growth strategy can help ensure a supportive and collaborative relationship that drives sustainable growth.
Encouraging SaaS companies to diversify their revenue streams and explore new markets can also mitigate the impact of economic uncertainties.
Government support is also vital. The Irish government’s proactive measures, such as the Seed and Venture Capital Scheme, are crucial. This scheme aims to inject €250 million into the market, fostering a supportive environment for startups and encouraging innovation [3].
Addressing the talent shortage by investing in education and training programs tailored to the SaaS industry is another key initiative. Collaborations between industry and academia can help create a pipeline of skilled professionals.
Simplifying regulatory processes and providing clear guidelines can also help SaaS companies navigate compliance issues more effectively. This includes staying updated with GDPR and other data protection laws. As would enhancing Ireland’s data center infrastructure to support the scalability and reliability of SaaS offerings.
Conclusion
Ireland’s SaaS sector is poised for significant growth and innovation. The country’s robust tech ecosystem, geographic location, and favourable economic policies create an ideal environment for SaaS companies to thrive. However, to fully capitalise on these advantages and overcome challenges such as talent acquisition, regulatory compliance, and economic fluctuations, tailored strategies for different stakeholders are essential.
For startups: Focus on innovation and differentiation to capture market share both locally and internationally. Leverage Ireland’s supportive ecosystem and government initiatives to scale effectively.
Specifically, target sectors where Ireland has a strong presence, such as aviation, food and beverage/retail, data centers, energy transition, financial services, and life sciences. These sectors offer a customer base that can drive your internationalisation efforts.
For private equity firms: Identify high-potential SaaS companies with strong growth trajectories. Focus on sectors where Ireland excels, such as aviation, food and beverage/retail, data centers, energy transition, financial services, and life sciences.
Invest in businesses that demonstrate innovative solutions and have the potential to scale globally. Provide not only capital but also valuable expertise and resources to help these companies grow. If you are not Irish PE, then be sympathetic to local cultural nuance.
For policy makers: Continue to provide a supportive regulatory and economic environment. Look to successful models from other countries to identify best practices that can be implemented in Ireland.
Invest in infrastructure and talent development to ensure the long-term success of Ireland’s SaaS sector. Simplify regulatory processes and provide clear guidelines to help SaaS companies navigate compliance issues more effectively.
Two examples are Singapore and Estonia [4]. Each has a business-friendly regulatory environment, low corporate tax rates, excellent digital infrastructure and an e-Residency program, which allows entrepreneurs to start and manage a business online from anywhere in the world.
By addressing these challenges with targeted strategies, Ireland can foster more high-profile success stories in its SaaS sector and position itself as a key player on the global SaaS stage.
Get in touch
If you're seeking investment for your tech business, need help with growth and scaling, or looking for SaaS opportunities in Ireland, we can provide the necessary contacts and expertise.
Feel free to reach out to us for support.
James Lovell
Associate Director
KPMG in Ireland
Christopher Brown
Partner, Head of Strategy
KPMG in Ireland
Morgan Mullooly
Associate Director
KPMG in Ireland