Software as a Service:

Software as a Service ("SaaS") effectively redefines the software deployment model from the traditional off-the-shelf packaged application to a dynamic, "pay as you go" internet- delivered service relationship. SaaS companies leverage the increasing prevalence and power of broadband to offer value added services to customers on a subscription basis. Customers derive significant value from this new model by not having to manage applications internally, only paying for what is used, and keeping critical data backed up and stored securely offsite. Portfolio companies in this space are thriving on the lower cost of customer acquisition, recurring revenues, and decreasing service and implementation costs. The table below shows the increased premium being given to SaaS companies over traditional enterprise software companies. In all, Fund III has seven portfolio companies deploying information technology solutions on a SaaS basis.

A leading example of SaaS in the Fund III portfolio is EVault, a company that provides online disk based data back-up and disaster recovery as an outsourced service to medium sized enterprises. Instead of relying on employees to back up their data to tape and ship them offsite, EVault provides a service to automatically and securely back up information in a secure remote location. The company has grown at a compound annual growth rate in excess of 90% since River Cities' investment in 2001.

SaaS can also be utilized in the healthcare arena to reduce the total cost of ownership to the customer, drive efficiencies, and improve the quality of care to patients. SciQuest is a Fund III portfolio company that provides a hosted application for customers to purchase supplies from over one thousand enabled vendors that have been approved to link to the customer. Customers are large pharmaceutical companies, biotech firms and institutes of higher learning that have strong research initiatives. Some customers currently purchasing supplies through SciQuest include Glaxo SmithKline, Roche, Inspire Pharmaceuticals, Pennsylvania State University, University of Chicago and Yale.