The Decline of Software as a Service (SaaS) Might Be Imminent?

SaaS Services Face Potential Decline?

In the ever-evolving world of Software-as-a-Service (SaaS), founders are increasingly recognising the importance of strategic finance as a key driver for success. This shift in perspective, viewing finance as a leadership function rather than a reporting one, equips founders with the tools necessary to navigate the current market.

Partnering with Chief Financial Officers (CFOs) has become crucial in this regard. Together, they are creating a decision-making rhythm, runway, Go-To-Market (GTM) bets, and a financing playbook. This collaborative approach helps avoid drift, allowing for regular review of runway, revisiting assumptions, and recalibrating growth plans.

The SaaS industry is experiencing maturity in some markets, leading to slower expansion and downgrades. However, precision, not just ambition, will determine success in the next cycle. This is evident in the shift towards usage-based billing, a more popular pricing model for SaaS companies.

One notable example of this maturity can be seen in a SaaS company operating in the real estate space. After raising $17 million, they utilised $500,000 in revenue-based financing to adjust their growth model from venture-backed to a sustainable, bootstrapped approach.

Customers are reacting with caution to an uncertain economic landscape and are scrutinising their tech stack spend more closely. Founders are, therefore, encouraged to reevaluate their burn efficiency with scenario modeling to understand the return on investment (ROI) of every dollar spent and identify the most strategic ways to reduce spending.

SaaS companies are also mixing capital types (non-dilutive, Venture Capital, and bootstrapped working capital) for GTM scaling. This approach improves leverage, minimises dilution, and aligns capital sources with use cases. Agile capital stacks enable fast pivots, allowing for doubling down on successful strategies and pausing when necessary to preserve resources.

The current market environment requires a focus on efficiency and sustainability over explosive growth to ensure controlled acceleration. Vertical SaaS is growing by delivering deep, industry-specific functionality where generalist tools fall short. AI-enhanced platforms are thriving as businesses continue to seek out new tools for automation, predictive insights, and personalised user experiences.

Jamin Ball, a partner at Altimeter, reported that aggregate data shows that Annual Recurring Revenue (ARR) for SaaS was down nearly 30% during Q1 2025 compared with the same period last year. This underscores the need for a focus on sustainability and efficiency.

Lastly, it's worth noting that the Forbes Business Development Council is an invitation-only community for sales and business development executives. However, the qualifications for membership in 2025 are not provided in the information available.

In conclusion, the SaaS landscape in 2025 is characterised by a shift towards efficiency, sustainability, and agile capital. Founders who embrace these changes and work closely with their CFOs are better positioned to navigate the current market and ensure the long-term success of their businesses.