Alok Goyal, Partner, Stellaris Venture Partners
Freshworks founder Girish Mathrubootham recently announced that the company crossed $100 million annual recurring revenue (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 firms 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. The Indian market today offers a start-up strong nucleus from which it can expand. Some India-focused SaaS companies, such as Capillary, CRMNext and Uniphore, have already started to demonstrate scale, and several others, including Signzy, Darwinbox, FarEye and Pando, have been funded recently.
There are several reasons behind this optimism. Scaled start-ups, including Flipkart, Myntra and BigBasket, are early adopters and this segment has grown rapidly over the last 2-3 years. This has created a critical mass of early adopters. Many traditional companies, such as ICICI, Asian Paints, ITC and Marico, are also actively working with start-ups, providing them access and support. Many start-ups are bagging annual recurring deals of ₹30-50 lakh from these customers.
Finally, the India market size seems to be coming of age; by our estimate, SAP’s SuccessFactors has built an approximately $40 million business in India within just a few years from its launch in just one category (human resources). 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 such as 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.
Reverse Pitch is like a normal investors pitch, but the roles are reversed; that means the start-up doesn’t present its business to investors, but investors and companies pitch their business concept, challenges and the like to start-ups.