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Global market leaders and category creators will be built from India: says Bessemer Venture Partners’ report on the Rise of SaaS in India.

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India is market-ready for SaaS, with acceleration in fintech, e-commerce, and health tech

Bessemer Venture Partners today announced the release of its ‘Rise of the Cloud in India’ report reiterating India as an emerging global leader in the Cloud space.

Software-as-a-Service (SaaS) continues to accelerate around the globe as industries and businesses shift toward cloud-based environments.

With digitization increasing year on year due to an increasingly hybrid world, India’s SaaS market is projected to be valued at $50 billion by 2030. Venture dollars deployed in the region have already reached $4.8 billion in 2021.

The report highlights the critical factors that will drive cloud innovation in India and key predictions for Indian SaaS businesses in 2022. With venture dollars flowing into the Indian SaaS ecosystem, it also underscores the importance of the venture ecosystem’s support to this sector.

Speaking at the launch of the Rise of the Cloud in India report, Anant Vidur Puri, Partner, Bessemer Venture Partners, said, “The SaaS model is a great engine as it generates predictable revenue streams every year. If you add to that, India’s advantages of the culture of efficiency and multi-product strategy, you turbo-charge the same engine with higher sales efficiency and net retention.

For Indian SaaS founders, there could be no better time than today to take advantage of the digital rails and rising cloud adoption and build category-creating products, not just for India, but also for the world”

Key highlights from the report include:

● Universally accepted digital rails across industries ( such as Aadhar, UPI, FastTag, ONDC), use of smartphones for business purposes and digitization are driving cloud innovation and adoption.

● Software companies are now building products and solutions on top of these commonly accepted rails and standards for industries such as fintech, healthcare, retail, and logistics among others.

● Use of smartphones and digitization will enable cloud software companies to build business enablement tools for mobile devices and further digital sales in both goods, services, and software targeting both local and global customers.

● Centaurs—SaaS businesses that have crossed the $100 million ARR mark—is a new milestone of success in the cloud world. In India, there are at least eight SaaS businesses belonging to this category compared to just one a few years ago.

● Indian SaaS companies are going public and gained the attention of global tech players – in the last eight months. Two IPOs from both the local and global markets and a number of global strategic M&As have taken place.

● Indian SaaS companies have the potential to be more efficient than their global counterparts. The BVP Nasdaq Emerging Cloud Index shows the median efficiency of global SaaS companies as:

~40%. Comparatively, based on our initial data, best-in-class Indian SaaS companies run at 80 -100% or higher sales efficiency even when these businesses approach $100 million ARR

“At Bessemer, we follow a roadmap-based approach, and the SaaS roadmap enables us to partner with dynamic organizations that aim to become the next generation of Centaurs. We are constantly identifying companies that can build for India and the globe, leading us to five key predictions – market leaders and category leaders will be built from India, productization of services and acceleration in fintech, e-commerce, and health care. ”, Anant added

The report makes five key predictions:

  1. Global market leaders and category creators will be built from India across software categories. There are several category-leading SaaS companies that have already emerged from the region across SMB (Freshworks, Zoho), Enterprise (Icertis, Gainsight, Eightfold), Vertical (Zenoti, Innovacer), Horizontal (ChargeBee, HighRadius) Dev-tools (Postman, Browserstack), Infrastructure (Druva, Hasura, Amagi) and many emerging leaders such as Atlan, Leena AI, Appsmith, Plobal Apps, Acceldata among others.
  2. Fintech for all – A new wave of new technology initiatives is transforming the Indian financial system. The most fundamental amongst these is Aadhar which forms the basis of a digitally enabled bank account, as well as Mobile, led financial transactions (UPI). SaaS businesses built on these rails will lead to more innovation in financial services enabling two main trends:

● Emergence of software products to support incumbent financial institutions like banks, insurance companies, and asset managers (aka financial services manufacturers) to provide better and faster service at lower cost across the country e.g. Perfios, Lenstra

● Rise of fintech solutions that allow every company to be a fintech company by providing banking as a service e.g. M2P, Zopper.

  1. Enabling e-commerce – In the last decade, e-commerce has ballooned with almost $100 billion of Gross Merchandise Value transacted across different B2C, B2B, and B2B2C internet marketplaces. The next decade will be marked by e-commerce going mainstream in India. New software solutions will emerge to ensure even the smallest business can go online and serve every single pin code in the city with the same level of efficiency and customer satisfaction that these multi-billion dollar marketplaces have made consumers expect.
  2. Productizing services: India is a services heavy economy with massive fragmentation in supply. These services, particularly B2B services, will start to get productized as mobile internet penetration increases and as financial rails get standardized with ease of KYC and payments across vendors and customers. These software businesses could be pure software tools or software-enabled marketplaces. Leaders in these businesses will use cloud software to organize the fragmented supply, standardize service delivery, increase transparency, and facilitate
    payments. Examples include PepperContent for marketing, SquadStack for sales, and ExMyB for IT services.
  3. Digitization of healthcare: Affordable healthcare, access to insurance, and financing are key levers that can change the overall standard of living for citizens in India. We believe the NDHM and Digital Health Stack will become the infrastructure upon which several new software businesses will emerge to increase insurance penetration as well as access to alternative forms of healthcare financing in India. Examples included IHX, i3 Systems, Healthplix, DocOn, and Remedinet.

The Indian SaaS market is poised to become one of the globe’s top centers of innovation in the next decade. With technical and developer talent on the rise, a growing entrepreneurial ecosystem increased venture funding, and continued regulatory support, India will see transformative growth in this sector.

About Bessemer Venture Partners:

Bessemer Venture Partners helps entrepreneurs lay strong foundations to build and forge long-standing companies. With more than 135 IPOs and 200 portfolio companies in the enterprise, consumer, and healthcare spaces, Bessemer supports founders and CEOs from their early days through every stage of growth. Bessemer’s global portfolio includes Pinterest, Shopify, Twilio, Yelp, LinkedIn, PagerDuty, DocuSign, Wix, Fiverr, and Toast and has $9 billion of capital under management. In India, Bessemer’s investments include Swiggy, UrbanCompany, Pharmeasy, BigBasket, Livspace, and Perfios. Bessemer has teams of investors and partners located in Tel Aviv, Silicon Valley, San Francisco, New York, London, Boston, Beijing, and Bangalore.

Born from innovations in steel more than a century ago, Bessemer’s storied history has afforded its partners the opportunity to celebrate and scrutinize its best investment decisions (see Memos at bvp.com/memos) and also learn from its mistakes (see Anti-Portfolio at bvp.com/anti-portfolio).

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Prateek writes about everything in SaaS. When not chasing trends and scoops he likes to travel, and binge on Netflix. Got a scoop? Send it to [email protected]
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