India centric SaaS: Are we ready for take-off?
Freshworks founder Girish Mathrubootham recently announced that the company crossed $100M ARR – a defining moment for Indian SaaS companies. From its inception, Freshworks has believed in selling its products in global markets. Most SaaS investments by Indian VCs have been in companies targeting global markets, as the Indian market is thought to lack early adopters and is constrained by low prices, long sales cycles and cash collection issues.
However, we believe that the time has come to back India-centric SaaS companies. Indian market today offers a startup a strong nucleus from which to expand. Some India-focused SaaS companies have already started to demonstrate scale – e.g. Capillary, CRMNext and Uniphore – and several others have been funded recently – including Signzy, Darwinbox, Fareye and Pando.
There are several reasons behind this optimism. Scaled startups like Flipkart, Myntra and Bigbasket are early adopters and this segment has grown rapidly in the last 2-3 years this creating a critical mass of early adopters. Many traditional companies like ICICI, Asian Paints, ITC and Marico are also actively working with startups, providing them access and support. Many startups are bagging annual recurring deals of INR 30-50 lakhs from these customers. Finally, India market size seems to be coming of age – by our estimate, SAP’s SuccessFactors has built a ~$40M business in India within just a few years from launch within just one category (HR).
I would advise entrepreneurs to look beyond the US market. If you are building a large enterprise focused SaaS company, you might be better off building for India first. In areas like logistics and payments, the Indian market is going through a retooling cycle driven by the India stack and GST implementation, leading to a huge opportunity for SaaS businesses.
If you are building one, we would love to speak to you.