The rise of the challengers - 3 traits of successful Indian SaaS companies

Whenever I meet any investor or a fellow entrepreneur, the first thing they ask me is what markets do I target - global or Indian? While this question comes in a variety of forms, it certainly attracts everyone's curiosity. But lately, these questions have become important. Entrepreneurs and VCs alike, now have the confidence that India can produce great SaaS companies challenging its Silicon Valley counterparts with superior products and execution.

One of the primary reasons behind this is that Indian entrepreneurs have become bolder and more ambitious. The trend is aided by a healthy mix of young and experienced entrepreneurs willing to take bold risks, and investors ready to bet on them. There is also the emergence of large tech companies that can provide these companies a spring board. However, selling technology to large enterprises in India remains as tough as ever. That is the reason most people will advise you to sell it to a global market. In my humble opinion, following are some of the trends that an entrepreneur will do well to remember.

In the last few years, we have seen a surge in SaaS companies in India that cater to a large market and are the chief challengers to the market leader. We analyze some of the traits that these companies share.

1. Smaller sales cycle

In most cases, the size of the deal decides the sales cycle. Lot of these startups are competing in a super competitive market that has smaller deal sizes. Smaller deal sizes enable these startups to scale distribution online and get rid of the need to do feet-on-street model, enabling them to provide sales and support completely online. These startups are selling to small and medium businesses all over the world over web and mobile.

2. Distribution strategy

Smaller ticket sizes of the product allows startups to truly scale their product using internet marketing and growth hacks built inside the product. Over the last few years, the amount of expertise and experience in global B2B digital marketing has increased. An entrepreneur can today turn to a number of experts and mentors to learn about different marketing channels like SEM, content marketing to ingenious growth hacks. During our stay at TLabs, we interacted with the best in digital marketing, and accessing these experts has become easier than ever! Indian entrepreneurs are now armed to the teeth to become major challengers in the market.

3. Investment risk appetite

Risk capital for entrepreneurs is on the rise. Recession or not, ambitious startups are springing up and capital available to them is on the rise. Leading venture firms like Sequoia, Accel Partners as well as smaller funds have actively started investing in such startups. The rest of the gears of the ecosystem like expertise, mentors, early stage funds, accelerators and angels have backed ideas with a global market in mind. The risk appetite of investors has changed and it has played a major role in taking the new challenger India forward.

A few standout trends

Although this may not be true for each one of them, but startups are entering an extremely competitive market. There are many solutions available to the problems they are trying to solve but there is enough space to challenge the big brother. Freshdesk bravely took on Zendesk & Salesforce (desk.com), Explara took on Eventbrite , Webengage took on Uservoice and Wingify took on Optimizely! These players have entered large markets but quickly became the major challengers in the market. They created unique set of features, business models, distribution strategies and executed fast. Investors were ready to back them, and are now funded to execute their large visions and plans aiming to dislodge the leader and occupy the number one spot in the market.

While such startups are definitely getting more and more attention from investors, there are a few examples who have built really large companies without taking external investments. Such examples include Zoho, Wingify and Fusioncharts which were completely bootstrapped. Other startups have taken funding from known firms and angels. The cost of starting a product firm and achieve scale has come down exponentially. Startups are now in a unique position to decline funding and still create large sustainable businesses.

Examples to follow

Although India is still considered an ace and a pioneer in software services industry, entrepreneurs making products have brilliant examples they can follow. The first example is Zoho, founded in 1996 in Chennai, with an empire of 2000 employees spread across the globe. And well, Zoho is a serious challenger to a major like Salesforce. Other companies like FusionCharts, the undisputed global leader in charting solutions was founded in 2002 by young Pallav Nadhani. These young brilliant entrepreneurs found a way to lead the market and challenge the incumbent through sheer execution. Such precedence is extremely important to entrepreneurs and investors alike. The next wave of challengers has already come. A few examples that come to mind are startups like WebEngage, Capillary, Freshdesk, Chargebee and Explara which are scaling up really fast and have made a mark for themselves in global markets.

The rise of the challengers

Indian ecosystem is at a unique position to tackle large markets with awesome entrepreneurs and investor appetite for such businesses. Indian startups are in a position to be the major challengers and ready to disrupt businesses globally. It wouldn't be surprising to see the next billion dollar SaaS company coming from India in the next five years!