The Indian SaaS industry’s resilience shines bright in the face of a stiff funding winter, defying expectations with a projected 2.5 times growth to reach $26 billion in revenues by 2026, according to a report by Chiratae and Zinnov.
The “India SaaSonomics: Navigating Growth and Efficiency” report noted that Indian SaaS companies are doubling down on growth (revenue generation) while ensuring operational and capital efficiency.
Though concerns of a recession loom large, the Indian SaaS industry has displayed antifragility to withstand turbulent times. Atleast 93 per cent of the founders surveyed, anticipate an increase in revenues in the next 12 months.
Amidst the wariness of global macroeconomic headwinds, 9 out of 10 investors continue to believe in the India advantage and are betting on existing and newer growth areas. While the world and India – to some extent – witnessed layoffs, 96 per cent of the Indian SaaS unicorns and potential unicorns grew their headcount throughout 2022.
Venkatesh Peddi, Managing Director at Chiratae Ventures, and head of SaaS investments, stated, “The steadfastness of the Indian SaaS industry, coupled with its ability to adapt to changing market dynamics, has led to its outperformance on a global scale. Given India’s robust foundation, presence of visionary leaders, and strategic exploration of key sectors, we predict that the Indian SaaS industry is poised for tremendous growth.”
Despite a widely acknowledged funding winter in the Indian start-up ecosystem, seed-stage funding witnessed a 1.5 times increase, while early-stage funding experienced a notable 1.6 times surge in value during 2022. In fact, Indian SaaS start-ups secured three times more funding in 2022 compared to 2019, demonstrating a steady CAGR of 47 per cent.
However, the decline in SaaS company valuations in the public markets has greatly affected private markets, driving down late-stage funding. But stable deal volumes in Q1 2023 indicate that the funding slowdown for Indian SaaS companies has bottomed out, signalling a gradual recovery to look forward to in the upcoming quarters, the report said.
Housing over 1,650 funded SaaS start-ups, India also witnessed a surge in the number of companies surpassing the $1 million ARR in 2022. 2022 was also a record-breaking year with 280 SaaS companies clocking in revenues between $1 million – $10 million, a significant leap from previous years.