Explosive Growth Alert! Indian SaaS Industry Set to Skyrocket to $26 Billion by 2026.
According to the report, Indian software-as-a-service (SaaS) firms are intensifying their focus on expanding revenue streams while simultaneously prioritizing operational and capital effectiveness.
The Indian Software-as-a-Service (SaaS) ecosystem has demonstrated remarkable adaptability and resilience in the face of recessions and external disruptions. Despite a current slowdown due to tight macroeconomic pressure and a funding winter, the Indian SaaS industry is expected to grow significantly. According to a report by VC firm Chiratae and management consulting firm Zinnov, the industry is projected to reach a revenue of $26 billion by the end of 2026, which is 2.5 times its current size.
The report highlights that 93 percent of surveyed founders anticipate an increase in revenues over the next 12 months, indicating the confidence and optimism prevailing in the Indian SaaS industry. Indian SaaS companies are focusing on revenue generation and are simultaneously prioritizing operational and capital efficiency to drive growth.
Despite the challenges posed by the funding winter in the Indian startup ecosystem, the report notes a 30 percent increase in equity funding for Indian SaaS companies, amounting to $419 million in 2022. This growth is attributed to a surge in the number of deals, with 2,780 deals recorded in 2022 compared to 2,605 in 2021, and the total funding in 2022 exceeding that of the previous year by $100 million.
The report also highlights the positive trend in seed-stage and early-stage funding for Indian SaaS startups. 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 comparison to 2019, Indian SaaS startups secured three times more funding in 2022, showcasing a steady compound annual growth rate (CAGR) of 47 percent.
However, the report acknowledges that the decline in SaaS company valuations in public markets has had an impact on late-stage funding in private markets, leading to a reduction in late-stage funding activities.
Overall, the Indian SaaS ecosystem has demonstrated resilience and the ability to navigate challenging times, and it continues to attract funding and grow despite the macroeconomic pressures and funding winter. The sector's adaptability, growth potential, and positive outlook make it an important driver of the Indian startup ecosystem and the country's digital transformation.