<p dir="ltr">I keep seeing the term vertical SaaS come up in startup discussions and wanted to actually understand what is vertical SaaS before assuming it just means software for a specific industry. Here is what I have pieced together so far, would appreciate anyone correcting me or adding context.

<p dir="ltr">It refers to software built for one specific industry or niche, rather than a broad, general tool used across many different types of businesses, which is usually called horizontal SaaS. Because it is built around one industry, it tends to bake in workflows, terminology, and compliance requirements that are specific to that sector, rather than requiring heavy customisation afterwards. It often has a smaller total addressable market compared to horizontal SaaS, but I have read that it can make up for this with less competition and stronger customer retention, since switching costs tend to be higher.

<p dir="ltr">Pricing and sales motion seem to differ too, vertical SaaS companies often rely more on relationships, industry trust, and sometimes longer sales cycles compared to the more self serve model common in horizontal SaaS. Some vertical SaaS companies eventually expand into adjacent services beyond just software, things like payments or data, once they have enough industry specific trust and data.

<p dir="ltr">What I am still trying to understand is how founders decide which vertical is actually big enough to build a real company around, and whether there is a real risk of picking a niche that is too small to scale beyond a certain point.

<p dir="ltr">Has anyone here actually built or worked at a vertical SaaS company? Curious how you picked the niche, what made customer acquisition different compared to horizontal SaaS, and anything you wish you had known earlier.

There was a decent piece on Entrepreneur Plus Newsletter covering this that I came across recently, gave a useful founder perspective on the whole thing.