How this SaaS accelerator helps founders scale without huge upfront investments

Bengaluru-based, Upekkha, a B2B startup accelerator, aims to educate new founders and startup builders about Value SaaS. In four years, it has mentored 61 startups, with a total revenue of $60 million ARR.

How this SaaS accelerator helps founders scale without huge upfront investments

Monday April 26, 2021,

6 min Read

Success breeds success, and with the likes of Zoho, Freshworks, and Zenoti setting a precedence in gaining global recognition, many homegrown SaaS providers are poised to raise the bar.

Now with increasing players in the market, founders need a playbook to go global and build value-based SaaS companies. Instead of blindly chasing unicorn statuses or focusing on the end, would they not rather focus on the entrepreneurial journey?

Enter Upekkha, a platform that mentors and trains SaaS companies. Founded by Prasanna Krishnamoorthy, Sijo Kuruvilla, Thiyagarajan "Rajan" Maruthavanan and Shekar Nair in 2017, Upekkha is a SaaS accelerator. "With our tribe and network of SaaS founders, insights and past experience, we help SaaS founders build their SaaS Flywheel engine, which generates more than $1 for way less than the $1 invested into the business," says Prasanna.

Prasanna K, Upekkha

Prasanna, Founder and Managing Partner, Upekkha

This saves founders three to four years of self-learning, and more importantly, helps them avoid pitfalls. “Five out of our 10 startups in the first cohort in Upekkha built and scaled their "revenue flywheel" beyond a million dollar in AR,” claims Prasanna.

The early days

As the Managing Partner, Prasanna has more than a decade of experience with companies such as Microsoft and iSpirit, and also built a software defined networking product startup along with Upekkha co-founder, Shekar Nair. In his stint as CTO in residence for the accelerator programme at Microsoft Ventures, he worked with over 100 founders in several batches. This is where he noticed that many B2B founders are thrust on to the unicorn path, which does not really bode well for the entrepreneurs.

"I designed this new accelerator from the ground up to help B2B founders solve the basic equation of getting one dollar of profit for a dollar of investment. Being a flywheel revenue model, it would keep equity dilution to a minimum, helping founders stay in control and keep their options open. This is called the Value SaaS way of building a SaaS business," says Prasanna.

Designed primarily as a SaaS accelerator that gives founders the option to remain in control and build scalable growth year on year without huge investments upfront, Upekkha focuses only on B2B SaaS.

“We are about Value SaaS (not vanity), which creates founder optionality unlike funding optionality," says Prasanna.

Value SaaS is different from the Vanity SaaS mindset, as the latter chases vanity metrics of business building and usually requires $5-$6 in investment for $1 in revenue.

In Value SaaS model, founders create highly valuable outcomes for all stakeholders - customers, employees, investors, and themselves because they are in control of their business.

The Vanity SaaS model is where financial outcomes for 80 percent of founders are near-zero due to dilution, deal provisioning, forced exit, forced M&A.

"Often, a total addressable market (TAM) chasm exists - while founders may be able to build sustainable highly profitable $10million ARR business in a $100million TAM space, they are forced to go for higher TAM markets, where there may be higher risk and founders have lower capabilities, primarily because of large fund economic models," says Prasanna.

Many vertical SaaS markets may be early and small, and may need time to grow and mature. Impatience from investors leads founders to try to grow these markets too fast, and more often than not, fail in the process.

“In 80 percent of such startups, employees make no financial outcome from their common shares. Investors struggle as well with the current power law model of returns - 90 percent of VC firms fail to beat their benchmark returns,” says Rajan.

The opportunity

According to Prasanna, the Indian SaaS industry is about to explode. In the 90s, there were 200 IT services companies exporting $100million in software services. In 2002, it was 8000 companies exporting software services worth $12billion. To use an apt metaphor, India is at the cusp of a Cambrian Explosion in the SaaS space today.

During the actual Cambrian Explosion over 500 million years ago, many new species were created. Similarly, the startup industry is witnessing the emergence of many SaaS startups with the help of tailwinds from recent success stories. Helping many of them survive is Upekkha.

"We expect thousands of SaaS startups of all sizes and types to come out of India - a multi million revenue horizontal SMB business like Zoho or Freshworks, a Dev Tools player like BrowserStack or Postman, a deeptech enterprise business like Druva, or a vertical business like Zenoti," says Rajan.

Upekkha is backed by leading SaaS founders in India and abroad such as Pallav Nadhani, Girish Mathrubootham, Aneesh Reddy, Krish, Khadmi Bhatti, David Hauser, Anand Chandrasekharan, Vijay Raypati, Vinod Muthukrishnan, Shekar Kirani and two dozen other SaaS experts and individuals.

Expert names on the board notwithstanding, Upekkha still encounters challenges in educating new founders and other startup builders that bootstrapping versus funding is a false dichotomy.

"Most first time founders are enamoured by funding. Experienced founders know better. They raise the right amount at the right time and stage. The biggest challenge that we face is in educating the founders that they should focus on solving the business equation of creating a startup run after funding," says Prasanna.

The business

Explaining their business model, Prasanna says as an accelerator, Upekkha holds an equity position in them, and when the startups win by making their equity liquid, Upekkha too wins along with them.  

"The challenge that we notice is that founders who have diluted more than 50 percent in their captable have still not figured out a repeatable way to earn their million-dollar ARR, and at this point, we have no way to help them," says Prasanna.

Over the next 18 months, Upekkha will work with over 80 new SaaS startups. The company is also witnessing an increasing mix of global founders applying for their accelerator programme.

The selection process involves two rounds of interviews – one with Upekkha Tribe (a community of Upekkha graduated startups) startup founders, and one with Upekkha Partners.

Aspiring founders will have to go through business sprints, reviews and consultative sessions. The programme includes a carefully crafted concoction of SaaS frameworks, actionable insights and peer learning modules.

Uppekha charges 4 percent equity for their accelerator programme, which runs for six months, and a lifetime Tribe membership.

The company has so far assisted 61 startups, 7 cohorts and 127 founders. The combined revenue of all these startups is more than $60 million ARR.

The accelerator also has its own fund for select startups. It recently announced a $2.5 million fund aimed at supporting about 20 startups annually by investing $100,000 in each startup under its accelerator programme. Some of the startups that have been part of Upekkha are SignEasy, SocialPilot, imocha and Garage Plug.

Not alone in their efforts, Upekkha has competition in two other accelerators - Acceleprise and Startfast Venture Accelerator.

Edited by Anju Narayanan