This week's news of a £13 million ($21m) funding round for UK-based email management provider Mimecast gives further confirmation of the vibrancy of the SaaS landscape in Europe, in terms of both market opportunity and the strength of indigenous players. I've written several times in the past about the lack of visibility for European SaaS vendors, while taking the opportunity to highlight notable companies such as Netviewer, NTRglobal, e-conomic and others. One frequently recurring feature is a track record of organic growth ahead of significant venture funding — in Mimecast's case, its growth to date, garnering a 2,500-strong customer base, has been achieved with minimal seed funding. Now Index Ventures, one of Europe's leading technology VCs, has contributed what's being classed as a Series B round to fund expansion of Mimecast's business in north America, where it already has 300 customers.
The news comes at the beginning of a week that will see the formal creation of EuroCloud, the new industry body representing SaaS and cloud vendors across Europe, at its inaugural European board meeting in Paris on Friday. I'm posting this from Paris, getting ready to represent EuroCloud UK and to meet the chairs of up to 15 other European countries from Sweden to Portugal and Germany to Ireland. With a membership of several hundred European vendors already, the EuroCloud project promises to dissolve the cloak of invisibility that SaaS and cloud players in Europe have found so hard to break through in the past.
That can only be good for adoption, which just like the vendors themselves, is not getting the visibility it deserves. When I spoke to Peter Bauer, Mimecast's CEO, on Monday, he said something that intrigued me: "There's a vast market opportunity in North America and in some ways, it lags behind Europe in SaaS adoption." It's not often I hear the sentiment expressed — conventional wisdom says that Europe succumbs to new waves in computer technology some two to three years behind the US. But it seems that late adoption of earlier technologies is giving European business a head start in adopting cloud-based services of the type Mimecast offers. "Take email security as an example," explained Bauer. "In North America, there's much deeper penetration of appliance- and software-based solutions than in Europe." The same is true in email archiving, he added:
"Having launched in North America two years ago, the striking thing I've found is how much old technology exists in many customers around the email archiving space. Some customers have some very dated technologies running in their networks."
As well as a crop of proven ventures reaching a size where they're able to start expanding into the US market, there may now be more opportunities for smaller ventures in Europe to get funding. Sarah Lacy last weekend wrote about the views of European VCs such as respected investor Simon Levene, who has just left the London office of Accel Partners. "When it comes to early stage I'm just seeing a bigger market opportunity in Europe and Israel," he told her. "There's more of an opportunity [for a VC] to pioneer and strike new ground. That's part of what was exciting to me when I moved back here seven years ago."
The bottom line is, watch the news coming out of Europe on SaaS and cloud. There could be a lot more of it in the coming months and years. [Disclosure: I'm chairman of EuroCloud UK. See details of our upcoming meetings here.]