Industry-focused software startups have a much better chance of getting to product-market fit than other startups.
Vertical software companies focus on a particular industry, like dermatologists, childcare centers, insurance agencies, independent physical therapy businesses, big banks, or universities.
They don’t sell to every business of a certain size, unlike horizontal software companies. They sell to 1-5% of all businesses. Just veterinarians. Just hotels.
They started with a known customer with a specific problem. They had a very specific “Who” before they built a specific “What” to solve it.
Industry-agnostic companies start with a less-specific “What” and a more general “Who,” which is very different.
Both approaches can work just fine to create companies.
But the odds of PMF success are higher with industry software startups than horizontal startups.
Vertical SaaS startups are just more likely to make an amazing solution that makes their early customers very happy.
This means that the odds of founders getting paid back on their investment with a successful exit are actually higher in vertical tech startups.
Verticals are like base hits with better odds and VC-funded unicorns are the grand slams with higher returns.