NachoNacho - Discover & Save On Software

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Company & Team Introduction

NachoNacho is a SaaS marketplace and spend management platform for customers to discover, purchase and manage their software subscriptions. Today's subscription management for businesses is a massive headache tracking 10+ tools ranging from productivity, entertainment, education, etc. it’s difficult to keep track of everything from contract renewal dates, how many subscriptions you have, and how much your total software spend is. The company was founded by Serial entrepreneur and CEO Sanjay Goel @goelsanjay along with CTO Alan Szternberg founded NachoNacho in 2019 to try and solve these problems and help customers make sense of their SaaS spending. Previously, Goel founded Oximity (acquired by Scribd), worked at hedge fund Stoneworks Asset Management and held several high-ranking positions at top banks such as Deutsche Bank, Citi, and HSBC. NachoNacho is headquartered in San Francisco, and their team has scaled to ~21 employees.

Product Overview

NachoNacho’s platform offers two main products to customers. The first is their SaaS marketplace, which allows companies and individuals to buy and sell their software products. NachoNacho’s marketplace also offers large pre-negotiated discounts of up to 30% off certain subscriptions and lifetime deals where buyers pay a one-time fixed fee instead of a recurring subscription. The company also has an AI-powered recommendation engine which helps customers find the optimal solution for their needs. Second is NachoNacho’s SaaS spend management product that allows you to consolidate all of your SaaS purchases onto one platform where subscriptions are paid for using separate virtual credit cards, giving businesses a complete view of their SaaS spending and offering valuable features like the ability to be notified before a subscription ends, ability to put spending limits on virtual cards to avoid being overcharged, and avoiding difficult to cancel subscriptions with their one button cancellation.

Total Addressable Market

The total addressable market is difficult to estimate due to the multi-product nature of NachoNacho’s offering. Still, it is clear the market is massive and is set to experience blistering growth throughout the decade and beyond. The total addressable market of SaaS spend management alone totalled 624M in 2023, with a CAGR estimate of 21.2% through 2030, which will balloon NachoNacho’s total addressable market for SaaS spend management alone to over 2.4B.

Business Model & The Numbers

NachoNacho utilizes a straightforward 2-tier per-user SaaS pricing model. They offer a free month subscription to their standard plan to allow companies to try out their product before purchasing. After the trial, if customers want to continue using the service, they must choose between their $5 standard plan, which gives users unlimited virtual credit cards/subscriptions or a custom tier that requires contacting the company to discuss pricing for more flexible or unique requirements. The one straightforward and affordable self-service option removes the friction of researching which plan best fits their needs, so the SMBs they serve can get signed up quickly and get value from the platform as fast as possible.

Traction

NachoNacho has seen strong adoption from SMBs as they look to reduce SaaS spend and get greater visibility into their software stack and its costs. The company’s customers include Parabolic and Vantage Sports. NachoNacho has also done an incredible job building out the supply side of their marketplace with discount deals available for top products such as ClickUp, Drata, Hubspot, etc. and continuing to offer only highly vetted products will be essential for NachoNacho’s customer retention. Over 2.7 million in SaaS savings are available on the NachoNacho marketplace.

Competitors

Direct competition for NachoNacho is weak due to the company’s strategy. The combination of a marketplace with a subscription management platform, paired with their SMB focus, helps differentiate them from other offerings on the market. There are formidable competitors, but they have chosen to focus on just building a marketplace or subscription management platform while targeting a different market segment. Here are NachoNacho’s main competitors for each of their verticals.

SaaS management platform - Vendr: This is NachoNacho’s largest competitor. Vendr was founded in 2018 by Ryan Neu to revolutionize how SaaS is bought, sold, and managed. The company has taken a different approach to buying and selling than NachoNacho’s marketplace, giving companies the tools, advice, and data needed to help negotiate better pricing on their software purchases. The company is also more enterprise-focused, leading to a more complex system than an SMB-focused approach where customers seek a more affordable and easy-to-use product. Vendr plans start at ~20k per year for full platform access, and over $350M has been saved using Vendr’s platform. Vendr is exceptionally well capitalized after raising 150M series B led by Craft Ventures and also added Softbank to their cap table.

SaaS marketplace - Appsumo: Appsumo is the largest marketplace to buy and sell digital products. The company was founded in 2010 by ex-Facebook employee Noah Kagan. Appsumo is well known for its lifetime deals, where sellers will offer a special 1-time fee offer through Appsumo rather than paying a monthly subscription to increase sales. Appsumo does not charge a listing fee but takes a 5% cut of new buyer sales and 30% returning buyers sales. Appsumo generated over 80M in revenue through their marketplace in 2021, and the company is completely bootstrapped.

Funding

NachoNacho has raised one funding round in addition to the small initial SAFE from “The Alchemist” accelerator program, whose cheques are typically in the ~35k range. After early signal that the company had found product-market fit, they raised a $3M seed round in early 2022 to capitalize on the demand and start scaling. The round was led by AltarlR Capital, with participation from firms such as S16VC, PMC-SXSW, and Karman Ventures, among others.