The Blogs: The Vertical SaaS Gold Rush: How Israel Shapes the Future of Enterprise Tech | Alon Ghelber

Look at the most profitable enterprise solutions of recent times, and you’ll quickly notice that they all have key design aspects in common. From Slack to Salesforce to HubSpot and Monday, the biggest SaaS products have been horizontal solutions that address universal concerns like project management, sales, and customer relationship management.

These types of tools are part of a wave that has defined a golden age for SaaS, but as they have become the standard for companies everywhere, they no longer represent the competitive advantage they once did. Organizations at the enterprise level are looking for new ways to achieve marginal gains, and I posit that Israel’s ever-evolving tech scene is poised to deliver.

In previous pieces, I discussed the ongoing transformation of our tech ecosystem, Israel’s reinvention as an AI powerhouse, and emerging innovations in user-centric B2B, this time, I’d like to look to what’s next – to where the next technological gold rush could occur and what our role in it could be. This is the unfolding story of Israel and the new paradigm of vertical SaaS.

Enterprise needs, solutions, & market opportunities

For the longest time, horizontal SaaS has been the focus of Israeli companies because it has been fertile ground for growth. Companies like Monday.com, Walkme, and many others have achieved huge global success by providing SaaS solutions with universal appeal, facilitating essential operations for companies in a myriad of fields. But now, things are beginning to change.

As enterprise solutions see more widespread adoption and AI-driven technologies are being implemented at unprecedented rates, companies in many industries have experienced a sudden onset of technological maturity. For companies with diverse IT stacks and specialist needs, the limitations of all-purpose platforms are beginning to show to some extent, and the market for bespoke solutions is growing increasingly apparent. 

Enterprises are dealing with complex data integrations and interconnected workflows, while also trying to ensure compliance, so they want vendors that understand what they’re going through and meet them exactly where they are, and industry-specific solutions serve exactly this demand. Purpose-built ‘vertical’ software products provide the kind of tailored functionality that businesses need to run niche operations efficiently. What’s more, they offer deeper integration of automation tools and allow richer data moats that facilitate deeper insights, all with industry-specific compliance built in from the start.

The evolving needs of enterprises present a real opportunity for software companies. Not only is the demand for tailored software abundant, but it also boasts strong defensibility. As these solutions are so deeply embedded into critical enterprise operations, they are rarely disrupted or replaced, so venturing into vertical SaaS could be an opportunity to establish strong long-term partnerships that provide rich, deep veins of recurring revenue for vendors.

Israel’s DNA and potential in vertical SaaS

So, where does Israel stand in all of this? Well, in fact, our tech industry is well equipped – perhaps even uniquely so – to thrive in the vertical SaaS space.

The first thing to point out is, of course, the high degree of technical proficiency that Israeli companies boast. With a well-established history of innovation in software, Israel’s tech leaders already excel in areas like data science, AI, security, and compliance, all of which have important roles to play in vertical SaaS development. Moreover, our country has strong academic pipelines, with more high-level, data-fluent talent flooding in all the time.

The other consideration is our start-up density and global mentality. As a nation that has consistently overcome its geography and punched above its weight in tech, Israel is replete with entrepreneurs who are accustomed to high-stakes problem-solving at the enterprise level. Not only that, but they are growth-oriented, used to targeting international markets, and overseeing rapid expansions. Not only do Israel’s tech leaders possess the insight required to anticipate enterprise needs and devise the right solutions, but they also have the mentality and wherewithal to lead such emerging markets.

With how deeply companies embed vertical systems into their operations, establishing strong relationships will require patience, as clients’ trust will need to be earned. However, Israeli innovators undoubtedly have what it takes to succeed, as they have proven time and time again.

Meteoric success stories

To illustrate how Israeli minds can lead the way in this new era of SaaS, we can highlight a couple of notable companies that are already establishing themselves on the world stage with their specialized solutions. A standout example is Navan Travel, an Israeli-founded company working to reshape corporate travel and expense management. For mid-sized and larger enterprises in industries that involve high travel volumes, this function of operations is often problematic due to its disjointed nature. 

Bookings, expenses reporting and reimbursement, and payment processing all need to be handled with travel policy compliance in mind, which is awkward and time-consuming with standard tools and manual processing. The leading minds at Navan have consolidated these functions in a single solution that integrates seamlessly into existing workflows and financial systems, and client companies’ resoundingly positive evaluation of Navan Travel tells a story in itself. Now set for an IPO, Navan is going from strength to strength, and its success can largely be attributed to its pivot into vertical SaaS.

Another great example is Base44, which was recently purchased by Wix. Led by solo founder, Maor Shlomo, the company sought to create a product purpose-built for visionary developers. Base44 released an AI-driven vibe coding platform that helps non-technical users build functional software from the ground up, and it got instant traction, prompting a swift purchase by Wix. The acquisition itself is a clear signal of Wix’s intent to pivot into vertical SaaS. By incorporating software that turns ideas into MVPs, Wix can use the functionality of Base44 to embed itself more deeply into enterprise infrastructure, making its products critical to how clients build theirs. The willingness to spend $80 million on a six-month-old startup speaks volumes about Wix’s convictions and the direction the wind is currently blowing.

These are just two examples, but many more are sure to come. It’s clear that Israel’s most forward-thinking tech companies understand the latent potential that exists in vertical solutions. They’ve recognized that deep integration and defensibility are the way forward, and those embracing this new approach are already reaping the rewards.

A defining moment for B2B tech

Versatility has long been a key part of what sets Israel’s tech ecosystem apart. From cybersecurity to fintech to AI, our domestic scene has produced minds capable of bringing innovation to virtually all fields. Now, they will need to prove their capabilities not by building for all industries, but by mastering the complexities of one at a time. It’s a different challenge to what they’ve faced before, but the potential is there and the early signs are more than promising. Enterprises everywhere are at a new frontier in their technological journey, and Israeli tech could well be what shapes their futures, one vertical at a time.