February 21, 2023

Software Comeback: January Spend Rebound among Larger Startups

SaaS Insights

Latest data from Cledara reveals a rebound in software spend for 2023, driven by larger startups increasing their spend after adapting to economic conditions.

Richard Gargan

Cledara can reveal its latest data on software spending trends, showing a rebound in spending in January 2023 after a reduction in December 2022. The report is based on data collected from a sample of 199 companies and shows:

  • An overall software spending rebound with an increase of 1.3% in January 2023 compared to December 2022, led by larger companies increasing their spend by 8%.
  • The IT and security category had the highest growth rate of 55%, while spending on sales software grew 42%.
  • Some software vendors have seen significant growth, including Grammarly, Docker, Loom, Zoho, and Vercel, while others experienced a decline in spending, such as WP Engine, Pipedrive, Mailgun, Cypress, and Freshworks.
  • Companies are advised to invest in the right software tools and solutions to drive growth and productivity, in addition to cost-cutting measures like removing duplicate features and under-used & unused licenses.

Software Spend Rebounds in January**

Scaleups spend on software, Month-over-month. Source: Cledara

After a 2.9% reduction in software spend in December 2022, the start of the new year brings a strong rebound in January 2023, with an overall increase in software spend of 1.3% led by larger companies increasing spend by 8% and stabilization of spend among smaller startups. This growth is a positive sign of recovery from the current economic downturn, with companies investing more in software tools and solutions.

Software Savings by Size of Spend**

We split companies into quartiles to see how different sized software budgets spent their budgets in January. 

The bottom quartile of spenders, who dropped the most in December by 11.1%, was the cohort with the biggest continuing spend decline in January, with a drop in spend of 0.5%. 

The top quartile (+$142,000 software spend over 12 months) saw a significant increase of 8% in January 2023, while the second quartile ($75k-142k software spend in 2022) and the third quartile ($31k-75k software spend in 2022) saw minor decreases by 0.3% and 0.1%, respectively – a significant stabilization after last Fall’s declines

Richard Gargan, analyst for Cledara, said:

“We’re seeing a rebound in software spend by larger startups as they adapt to the economic situation. While cost-cutting measures like removing duplicate features and unused licenses can help reduce software spend, it’s important for companies to invest in the right tools and solutions to drive growth and productivity.”

Software Spend Categories**

We analyzed which software categories were growing and which were shrinking and found that spending on sales and IT software grew the most:

Scaleups spend on software, by category, 3 month average vs previous 3 month period. Source: Cledara

The above list shows the percentage growth or decline in software spending across different categories in the three-month period from November 2022 to January 2023, compared to the previous three months from August 2022 to October 2022.

  • The IT and security category had the highest growth rate of 55%, indicating a significant investment in technology infrastructure and security measures to support remote work and the digital transformation of businesses.
  • Sales software spending also saw a strong growth rate of 42%, highlighting the importance of sales automation tools for managing leads, sales pipelines, and customer relationships.
  • The design category had a growth rate of 33%, indicating continued investment in design tools and services that help businesses create and improve their brand identities, marketing materials, and user experiences.
  • The operations category had a modest growth rate of 8%, indicating steady investment in tools and systems for managing business operations such as supply chain management, logistics, and inventory control.
  • The marketing and productivity categories had much lower growth rates of 3% and 2%, respectively, indicating a slower investment in these areas. This could be due to businesses already having robust marketing and productivity systems in place or a shift in priorities towards other areas.
  • The finance category saw a minimal growth rate of 1%, indicating stable investment in financial management software and systems.
  • On the other hand, the customer success and dev ops categories had a decline in software spending by 8%. This could be due to a decrease in the demand for customer success and dev ops tools and services or a shift towards more cost-effective solutions – along with reductions in staff.
  • The analytics and HR categories experienced a more significant decline in spending by 13%, indicating a potential shift in priorities or a slowdown in the adoption of analytics and HR tools.
  • Finally, the product category had the most substantial decline in spending with a reduction of 28%, indicating a significant slowdown in investment in product development and management software.

Software Vendor Ranking**

While companies are saving on software, some software vendors are seeing big increases in popularity. These 10 vendors saw +50% growth in average monthly spend in January 2023 vs Q4 2022:

  • The top-performing software vendor in January 2023 is Grammarly, with a growth rate of 236% compared to their Q4 average. Grammarly is a writing assistant tool that helps users write clear, mistake-free text. The software's popularity has increased in recent times, with more and more people using it to improve their writing skills.
  • The second fastest-growing vendor is Docker, with a growth rate of 153%. Docker is a platform for building, shipping, and running distributed applications. The software's popularity is likely due to the increased demand for containerization and microservices in the IT industry.
  • The third on the list is Loom, a video messaging tool that saw a growth rate of 131%. Loom allows users to record and share videos quickly and easily, making it a popular tool for remote teams and distributed workforces.
  • The fourth and fifth vendors on the list are Zoho and Vercel, with growth rates of 127% and 109% respectively. Zoho is a suite of online productivity tools, including CRM, email, and project management, while Vercel is a cloud platform for building, deploying, and scaling websites and applications.
  • Other vendors that made the list include Recruitee, a recruiting software with a growth rate of 87%, Opsgenie, an incident management tool with a growth rate of 85%, and Figma, a collaborative design tool with a growth rate of 66%.
  • Rounding out the list are Microsoft Office 365, the well-known suite of productivity software, with a growth rate of 64%, and Zoom, the popular video conferencing software, with a growth rate of 62%.

Up Next**

Cledara will continue to monitor software spend trends and release monthly reports. Stay tuned for our next report on software spend for February 2023, coming out in March. Subscribe to our newsletter to be notified when we release this report.

Click to learn more about Cledara’s SaaS management platform, the one platform to manage all your software subscriptions that helps companies reduce software costs by up to 30% and save up to 20 hours a month on finance & software administration.


For software spend analysis, Cledara looked at a sample of 199 companies who have a 12-month history of spending on software vendors. 

For vendor winners analysis, we selected software vendors with over $20,000 in annual spend using Cledara and who had at least 5 Cledara customers in each of the preceding 12 months.



Subscribe to our newsletter

Receive the latest insights in your inbox

Richard Gargan

Richard is Cledara's in-house Content Lead. With a background in finance, he is responsible for the analysis of SaaS data to provide readers with insightful and informative analysis to help you optimize your software spend.

Share this post

Subscribe to our newsletter and stay informed on the latest SaaS insights

Explore more

Explore more

Introducing our Buyer’s Guides: A Smarter Way to Buy Software

Cledara’s buyer’s guides offer for free all the information needed to make an informed decision when it comes to purchasing software.
Read more

The Top SaaS Tools for 2023 based on data from 1,000+ companies

According to Cledara’s world-leading data on software purchasing, these are the 20 top SaaS tools for 2023—by spend, by usage and by growth.
Read more

The Software Stack Guide for Startups

All you need to know to set your software stack for scale. Including insights from 400,000+ software purchases and renewals.
Read more

Market Insights From our Worlds Leading SaaS Dataset

Leveraging our world-leading dataset on SaaS purchasing, usage, renewals, and churn we look at the health of the SaaS market, the purchasing differences between small and large organizations, new annual purchasing trends, and churn insights.
Read more

Ramp vs Brex: A Comprehensive Analysis

Which is best for your business, Ramp vs Brex? Our ultimate rundown can help you decide.
Read more

SaaS Market Defies Turmoil

Cledara can reveal that overall spending on software by companies has increased by 25% over the past 12 months. Uncover more spending patterns in the software market, the evolving role of finance teams, and the top emerging software applications.
Read more

What is SaaS?

Software as a Service (SaaS) is a cloud computing model that allows users to access applications over the Internet. But there's far more to it - find out here.
Read more

The Great Flattening

Jason Lemkin, founder and CEO of Saastr, discusses the shifts and challenges in the SaaS market at Saastr Europa 2023. He reveals how the market is experiencing a 'flattening' with a slowdown in growth and tightening fundraising landscape.
Read more

Avoid $65m Cloud Bills with a Cloud Management Platform

Wondering if it's time to adopt a Cloud Management Platform? Here's everything you need to know before investing.
Read more

The Top SaaS Companies in 2023 According to Our Data

We dug into our data to see what we could learn about the 300 most successful SaaS companies in 2023.
Read more

State of AI in B2B

Discover the latest insights on AI adoption in the business world, as Cledara reveals the top 150 AI-powered SaaS products used by startups to improve efficiency and drive growth.
Read more

Q1 2023 SaaS Market Insights

Discover the latest insights into the Q1 2023 SaaS market, including the growth in software spend, top growing software categories, and the most popular new software applications in March.
Read more

The Future of SaaS - Five Predictions from Bessemer

Cledara is recognized as a top player in the fight against inefficiency and sprawl in the SaaS industry in Bessemer Venture Partners' State of the Cloud 2023 report.
Read more

3 Reasons Why SaaS Vendors Are Raising Prices and What You Can Do About It

Fight software price rises and stay proactive in managing your SaaS subscriptions to get the most bang for your buck.
Read more

Software Spend Slumps Despite Modest Annual YoY Growth

In February 2023, software spend decreased by 3.7%, despite a 21% yearly increase. Cledara found that IT and security software had the highest increase.
Read more