While it is clear that the Covid-19 pandemic and associated lockdown/social distancing has impacted just about all companies globally, there are some sectors specifically inside technologies that are experiencing tailwinds. Especially the ones that make work or company continuity from house more productive and secure, like cloud-primarily based SaaS application corporations, says Venkat Vallabhaneni, managing companion, Inflexor Ventures, an early-stage, sector agnostic tech VC fund. “SaaS companies have an edge as they are asset light with quick and easy DIY type adoption, have recurring revenue models and also lend themselves well to WFH,” he tells Sudhir Chowdhary in a current interview. Excerpts:
Why are you focusing on deep tech and SaaS at Inflexor? Is the SaaS space in India however to obtain its complete glory?
Jatin Desai (managing companion) and I each come with a sturdy technologies background—having set up and led technologies divisions for international banks, and also getting scaled our personal tech focused ventures in the previous. Deep tech/SaaS are an apparent decision for our investment thesis/ethos. Also, SaaS corporations have an edge as they are asset light, give swift and uncomplicated adoption, give non-linear development and have recurring income models.
We are a sector-agnostic fund, seeking for items leveraging sturdy technologies/IP/innovation to differentiate and generate a mark for themselves in domestic and international markets. B2B, enterprise application platforms are exactly where our sweet spot lies. Having mentioned that, we are comfy investing in selective B2C customer tech and items with differentiated company model and technologies IP.
Indian SaaS sector has 1,000-plus corporations, producing revenues of $3.5 billion in FY20. Around 150 corporations out of these generated an ARR of more than $1 million. Around seven of them are unicorns with the likes of Zoho, Freshworks, Druva, Postman, and so on. And 75% of the demand for Indian SaaS items comes from overseas. If this is any indication, we have good issues to be witnessed from this space in the future.
Do you see any challenges in SaaS startups post Covid?
While the pandemic and associated lockdown has impacted just about all companies globally, there are some sectors specifically inside technologies, like cloud-primarily based SaaS application corporations, that are experiencing tailwinds. Especially the ones that make work or company continuity from house more productive and secure, or OTT platforms with their endless decision of content to preserve folks entertained.
Another SaaS primarily based sector which has observed substantial uptick in Covid-19 occasions is edutech with important interest from K-12 children as effectively as millennials seeking to upskill themselves from the comfort of their houses. Our Fund–I portfolio corporations supplying SaaS options in EduTech, cybersecurity, automation are seeing some important tailwinds with actual sales or in-bound leads up by 3X to 4X compared to pre-Covid-19 occasions.
SaaS was a pretty new term/ notion back in 2015, with slow adoption on each B2B and B2C fronts. But with improved awareness of its advantages, it has develop into a preferred company model. Covid-19 has offered it the required push for fast digitalisation and acceleration in digital adoption by customers.
Which are the sectors that you concentrate on?
Few of the sectors that we are focusing more from our Fund–II are fintech, healthtech, edutech, customer tech and also opportunistic sectors such as space tech. From a SaaS viewpoint, the maximum emergence we are observing is from healthtech with various startups supplying EMR upkeep, effective final mile distribution of medicines, B2B platforms assisting with scans for swift diagnosis of Covid-19 and other ailments, and so on.
Another space would be enterprise tech supplying B2B options to not only strengthen their internal processes but also enhance their attain and revenues.
What is the chance out there for SaaS in India and globally?
SaaS corporations (from the mid players to the globe giants) has been getting immense traction, specifically in the final handful of months and is anticipated to continue so. VCs investing $32 billion globally in 2019 in SaaS corporations clearly demonstrate the faith they have in their development. India has the geographical benefit to price tag its SaaS items substantially reduced compared to its international peers, to attract shoppers.
Also, India’s young demographic (forming a important portion of India’s enormous user base) with its huge consumption of effortlessly accessible online content becomes a magnet for corporations to setup as effectively as invest in India.