I’ve had a terrific response from VCs who wanted to tell me about their SaaS-based portfolio companies. The breadth of industries covered is amazing – automotive, healthcare, financial services, logistics, retail – they’re all there.  As I talked with these startups I noticed a common thread in their early-stage business strategies – the decision to use professional hosting firms for their applications.

Building out an enterprise-grade data center is hugely expensive. Most of these startups are subject matter and software development experts, but data center operations are a different animal.  Why use up precious startup capital when you can hire experts to host your apps for you?

There are a number of firms out there to help. This summer I had a chance to work with the folks at OpSource and Rackspace pretty regularly. Tons of experience there.  Way beyond just power & network like in the old ASP days, these guys know to help startups meet the SLAs that customers will require to trust a SaaS application.  The startups I work with see the value proposition here too: Conserving funding while being able to focus on core product delivery – what’s not to like?