The Second wave of India’s software for the world
Authored by Harshit Tahiliani, Associate, IvyCap Ventures
Until 10 years ago, India never made it to the list of countries to look at for the next wave of innovation in software products. However, with the help of a growing ecosystem, high-quality service and product talent, and the inflow of capital from global investors, India has successfully produced 13 unicorns in B2B Software-as-a-Service (SaaS). These unicorns are followed by a long tail of startups, many of which are expected to hit that milestone in the next few years, including some of the 60+ startups that have raised Series C+ rounds in the last few years.
With the success of the first wave of SaaS startups, India witnessed 250+ new SaaS startups founded by former employees of existing winners such as ZOHO, Freshworks, and HighRadius, among others. Within these, globally competitive product-led companies have gained maximum traction (30–35%), as these startups are being welcomed by a mature ecosystem that includes tried and tested global GTM strategies, niche talent across design, data science, AI and ML, industry-specific associations and accelerators, and a growing number of successful founders looking to give back to young entrepreneurs, positioning them to better compete in global markets.
Amongst the upcoming SaaS startups in India, many of the winners are likely to emerge from products that leverage AI to create value for their customers. AI solutions being fundamentally different from traditional SaaS in their data intensity will require a new set of skills across deep data management, data science, and data modelling. This will lead to a fundamental difference in the capabilities of the software, where the AI-based tools will not just be a ‘feature’ in existing applications but will create the next wave of enterprise disruption, akin to the impact of the Cloud at the turn of the 21st Century.
While the applications of AI-based software can be varied, India’s advantage will lie in those that have a higher intensity of service, those that are more vertically focused, or those that are built on India’s unique data sets. AI applications when built at scale can have the ability to attract premium valuations, allowing investors and founders to realize an attractive exit. By 2030, AI applications and services together have the potential to create additional market capitalization of more than $500B for Indian companies.
Source:- India SaaS Report 2021 by Bain and AI-enabled SaaS by IFC and Stellaris
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