Indian SaaS on the upswing, says Bessemer Venture Partners report

Titled ‘The rise of SaaS in India,’ the report estimates that nearly $4.8 billion equity investment flew into Indian SaaS companies in 2021.

Higher sales efficiency compared to global peers and adopting a multi-product strategy early on differentiates Indian Software-as-a-Service (SaaS) companies, according to a recent report by US-headquartered early-stage venture capital fund,  Bessemer Venture Partners.

Titled ‘The Rise of SaaS in India’, the report stated that while the sales efficiency of a SaaS company in the US stood at 30-40 percent at $100 million Annual Recurring Revenue (ARR), their Indian counterparts run at 80-100 percent sales efficiency. It added that most Indian SaaS companies spend less than $100 million to get to the $100 million revenue mark.

The report also highlighted that Indian SaaS businesses often create their second and third products even before the first product reaches $5 million ARR. This is unlike their US counterparts that start diversifying after the first product reaches $30-$40 million in ARR.

“We are seeing a large number of companies which are building cloud software in India and selling to Indian customers, apart from the crop selling to global customers,” Anant Vidur Puri, Partner at Bessemer in India, told YourStory.

He gave the example of fintech startup Perfios, a Bessemer portfolio company that raised $68 million in March 2022 and was valued at over $4 billion, which largely sells to Indian financial institutions. On a different scale, RateGain, which went public in December 2021, set a precedent by targeting its SaaS products toward online travel agents (OTAs) and hotels. 

The report attributed the rise of Indian SaaS companies to the presence of digital rails for different sectors such as fintech, healthcare, logistics, and ecommerce for rapid adoption and growth. The adoption of smartphones to run businesses and the ease of selling software over virtual conferences are the other key factors. 

The report stated that India has close to eight SaaS companies that have hit the $100 million ARR mark, including Pine Labs-backed BillDesk. The report projected that Indian SaaS companies would generate nearly $50 billion ARR by 2030. 

Bessemer said that the report’s findings tied its investment strategy in India, which is focused on early-stage investments in SaaS, fintech, healthtech, internet marketplaces, and, to some extent, Web3 companies.

“We have made strong SaaS bets in India over the last six to nine months with the likes of Pepper Content, Plobal, Rupifi, Leena AI, and Nova Benefits. Apart from the India fund, we continue to deploy capital in growth stages from our core global fund,” said Anant. 

Bessemer had announced the launch of its maiden India fund with a corpus of $220 million in November 2021. 

Edited by Kanishk Singh