Funding for Indian SaaS skyrockets 62.5%, Prepared to overtake china

Of the 14 startups that turned unicorns in the first quarter of 2022, five were SaaS companies.

The Indian SaaS business is expected to generate $100 billion in sales by 2026. The 2022 edition of the Chiratae-Zinnov India SaaS study, titled “India SaaS – Punching Through the Global Pecking Order, emphasised this. According to the survey, India is on track to overtake China as the world’s second biggest SaaS nation in the next few years.

The combination of successful listings, superior fundamentals, and a route to profitability is making SaaS firms in India an appealing investment subject. According to the research, the industry intends to attract a significant private capital inflow of up to $6.5 billion in the coming year alone, up from $4.2 billion last year.

Sudhir Sethi, Founder and Chairman, Chiratae Ventures, stated, “India is a global SaaS leader with over 35 SaaS companies in our portfolio like Uniphore, which recently raised $400 million, and others like Pixis, Hevo Data, Healthplix, CropIn, Pando, Deepfence, and Squadcast which are valued over $3.5 billion and last year overall raised $600 million. Chiratae predicts that investments in Indian SaaS will continue to grow at a massive pace with the revenue poised to cross $100 billion by 2026.”

In 2021, Indian SaaS expanded at a phenomenal CAGR of almost 55%, with sales on track to surpass $100 billion by 2026. According to the survey, the next wave of digital talent is projected to come from tier-2 and tier-3 cities; a large pool of over three million digitally talented workers would be ideal for SaaS firms looking to expand up in the future years.

Pari Natarajan, CEO, Zinnov, said, “2021 was a watershed year for Indian SaaS – including exponential valuations, successful IPO debuts, a vast influx of VC investments, and an unprecedented number of unicorns. In fact, India is fast emerging as a clear leader in SaaS, and will supersede China to become the second largest SaaS nation in the next few years.”

The estimates are a reiteration of what industry consultants have already stated. According to a Motilal Oswal research published in March 2022, Indian SaaS companies might generate $70 billion in net revenue by 2030, accounting for around 5% of the worldwide SaaS business. According to the estimate, by 2020, Indian SaaS firms would have made $2.6 billion in sales, accounting for 1% of the worldwide market.

According to the Chiratae-Zinnov research, VC investments in SaaS startups will total $4.2 billion in 2021, rising by 55% this year to $6.5 billion. Numerous publications have already identified Indian SaaS firms as having great development potential — according to a December 2021 research by Bain & Co, these businesses accounted for 8% of all private equity (PE) and venture capital (VC) investments in 2021.

According to Bain & Co., these investments surged by 170 percent year on year in 2020 and are expected to rise tremendously in the future years.