Vertical SaaS used to be a sleepy and scrappy corner of the entire software market, but now, about half of all software companies are industry-focused.

They don’t create many billion-dollar companies we know about or attract monster VC funding.

Still, they are awesome businesses for founders that are efficient and create amazing founder-scale company value.

There are far more vertical SaaS companies than anyone sees. Here’s why:

1) They are not trying to be seen outside their industries.

On my Gregslist dot com list of all the software companies in 12 cities in North America, 51% of all 6200 software companies are industry-focused.

You don’t see 95% of them because these founders stay deep in their industries, don’t attend most SaaS events, and don’t make VC funding announcements.

Unless you are in that industry, you won’t hear about a successful fleet management software company that serves local governments.

2) There are 10x+ more vertical business app companies than horizontal ones.

Many types of critical applications are used to run businesses, such as CRM, accounting, ERP, practice management, and payments.

How many successful CRM companies are horizontal and serve any industry? The big ones we know about are Salesforce, Hubspot, Pipedrive, and Zoho. That’s 4. Maybe there are a few more.

How many vertical CRMs serve insurance agents, cosmetic dermatologists, auto repair shops, and 1000 other specialties? There are probably 10,000+ up-and-running vertical CRM companies, especially outside the US.

3) Vertical SaaS serves mostly small- and mid-sized businesses, not brand-name enterprise companies.

The largest companies customize Salesforce, SAP, and other enterprise software for their own industry and their own processes. Those are the software companies that spend big on marketing that we see.

Most vertical SaaS companies serve small or mid-sized businesses, which are most companies worldwide, especially outside the US.

4) Most vertical SaaS companies don’t attract big VC funding.

With their smaller markets, slower growth, and niche focus, most successful vertical SaaS companies aren’t interested in traditional VC funding. They create “founder-scale” success stories that don’t have “VC-scale” potential.

These great vertical SaaS companies don’t have big funding announcements, become darlings of the tech media, or create a buzz in their local tech ecosystems. We don’t hear about them, even when they dominate their niches.

5) The founders aren’t trying to sell to everyone.

You meet these founders and employees at local events or in your neighborhood and they don’t try to sell you anything. “We make software for physical therapy offices. You wouldn’t know about us. What do you do?”

Vertical SaaS is the silent majority of companies in our own industry. We just don’t hear about them.