Net revenue

Indian SaaS startups to surpass $100 billion in net revenue by 2026: report

New Delhi: Indian Software-as-a-Service (SaaS) startups are set to grow exponentially over the next four years to reach $100 billion in net revenue by 2026, according to the Indian SaaS Landscape Report, 2022 by Indian venture capital (VC) from consulting firm Chiratae Ventures and US consulting firm Zinnov. India’s SaaS industry generated $8 billion in net revenue across the industry in 2021, the report adds.

The projections reiterate what industry consultants have already said. In March 2022, a Motilal Oswal report stated that Indian SaaS startups could collectively account for $70 billion in net revenue by 2030, or around 5% of the global SaaS industry. According to the report, Indian SaaS startups have achieved $2.6 billion in revenue by 2020 to account for 1% of the global market.

Currently, India is the third largest SaaS provider in the world, behind the United States and China.

Pari Natarajan, chief executive of Zinnov, believes that Indian SaaS startups could overtake China in “the next few years” in terms of annual revenue. He also added that investments in Indian SaaS companies will continue to grow proportionately.

The Chiratae-Zinnov report said that in 2021, venture capital investments in SaaS companies amounted to $4.2 billion – which could increase by 55% this year to reach $6.5 billion. . Indian SaaS startups have also been singled out by numerous reports for high growth potential – according to a Bain & Co report in December 2021, these startups accounted for 8% of all private equity (PE) and VC investments in 2021 .

These investments are reported to have increased 170% year over year in 2020 and are also expected to grow exponentially in the years to come, according to Bain & Co.

In terms of market maturity, the Chiratae-Zinnov report claimed that many Indian SaaS startups have managed to achieve a 40% revenue contribution in 2021. Revenue contribution is the excess left over when operational costs such as Project expenses are deducted from the gross revenue earned by a business in a fiscal year. Revenue contribution also includes a company’s fixed costs such as maintaining office and information technology (IT) infrastructure, which, when removed, equals the profit earned by a company.

Indian SaaS startups that have recently gained unicorn status include Postman, Zoho, Freshworks, Icertis, and Druva, among others. According to the report, the SaaS sectors that have garnered the most interest from investors are sales and marketing, retail and e-commerce, healthcare and infrastructure.

Going forward, the report states that sectors such as cloud infrastructure, intelligent automation, cloud security services and web3 businesses may attract the greatest investor interest in the Indian SaaS space.

Increasing digitalization, more affordable automation tools across industries, and stricter cybersecurity regulations could become key drivers for the growth of SaaS startups in these industries. For Web3 companies in India, clarity on regulatory policies on blockchain and cryptocurrency technologies could be key for startups in this sector to grow and also attract investor interest.

However, even without regulatory clarity, web3 companies have continued to grow in India. CoinDCX, an Indian cryptocurrency exchange, announced $135 million in funding earlier today to see its valuation rise to $2.15 billion. Earlier this month, web3 startup incubator Buidler’s Tribe, crypto exchange WazirX, and Goa Institute of Management’s Atal incubation center launched the Blockchain Accelerator program with the aim of helping web3 startups find funding.

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