Now, Asia’s third largest economy is ready for the next big technological frontier: offering a new generation of software vendors like Zoom or Slack.
There are nearly a thousand such companies in India, 10 of which are unicorns, or startups worth at least $ 1 billion, according to the report.
Freshworks was founded over ten years ago in the city of Chennai, in southern India. Like Salesforce, it provides software to help companies manage relationships with their customers. It is also the oldest Indian unicorn in the industry, having raised funds from investors such as Tiger Global and Accel, and has more than 50,000 clients. The company was last valued at $ 3.5 billion in a 2019 funding round, according to data company Tracxn.
India’s 10 SaaS unicorns, six have reached this milestone in 2020, and investors around the world are paying attention. Last year, investors poured $ 1.5 billion into Indian SaaS companies, four times more than in 2018 or 2019, according to the SaaSBoomi report.
Investors are delighted to SaaS due to “mass adoption” of software over the past decade, says Mohit Bhatnagar, Managing Director of Sequoia Capital India.
“India actually has one of the largest developer communities in the world,” Bhatnagar told CNN Business. Many of them have worked in some of the world’s largest tech companies.
Abhinav Asthana, the co-founder of Postman, pointed out that his experience working as an intern at Yahoo in Bangalore was instrumental in the decision to create his product.
He had the idea of creating a tool that would simplify the API (Application Programming Interface) testing process. An API is programming code that defines how two applications communicate with each other, and Postman says this has made it easier for engineers to work together when designing and building their APIs.
“We saw how software was created in these global companies and we saw API was a key issue,” Asthana told CNN Business.
Now Postman is India’s most valuable SaaS unicorn, with a valuation of $ 5.6 billion.
International clients, Indian engineers
“If you’re building a SaaS business in the United States, it’s better to have a million dollar customer than a $ 10,000 customer because you have to pay for sales and marketing in that country.” said Prasanna Krishnamoorthy, Managing Partner at SaaS. Upekkha accelerator. “When you serve Indian customers, you can have these little and medium-sized businesses, as well as large. “
Almost 98% of Fortune 500 companies use Postman’s products, according to Asthana, while Freshworks’ first customer was based in Australia.
SaaS companies are much better placed to go global than e-commerce companies like Flipkart in India, for example. They write software once and then are able to use it multiple times.
“For a Flipkart you need billions of dollars [to grow internationally], but for a Freshwork you need a lot less capital to go global, ”said Mathrubootham, who is also an investor in Postman. This is because e-commerce businesses need a lot of money to set up physical operations elsewhere – they have to hire a delivery service. drivers, rent warehouses and buy inventory.
Bhatnagar of Sequoia Capital said Indian software entrepreneurs “mastered” the art of “distance selling” early enough. “Honestly, over the past couple of years the whole world has had to figure out how to make better distance selling,” he added.
Despite the euphoria, Indian companies must overcome certain obstacles before they can deliver on their $ 1 trillion pledge.
Indian engineers trained in the IT service industry may struggle to develop the discipline required to start a product-oriented business.
In IT, “you sell bodies and say yes to whatever the customer says,” Krishnamoorthy said. SaaS companies, on the other hand, must say no to 99% of [potential] customers, he added.
And the Indian startup ecosystem is still relatively immature compared to Silicon Valley. Despite the massive size of some local unicorns, Mathrubootham said the country does not have a “global technology product brand.”
But he hoped that future SaaS companies could change that.
“It is my personal dream to see India as a nation of products,” he added.