In the last few months, I have spent an extraordinary time reading up on B2B SaaS, doing research, analysing reports, identifying opportunities and trends, working on the business model of Amplifi (a SaaS only startup studio & venture accelerator) and finally launching it recently with an amazing team.
As we progressed from idea to launch, I became more and more passionate about B2B SaaS. I went from SaaS student to prolific SaaS user to a SaaS entrepreneur.
My first post therefore had to be about B2B SaaS on my (personal) opinion about its opportunities in India.
I strongly believe that if there’s one sector in India that is poised for hyper growth & global success, it is SaaS. I can foresee many global SaaS companies “made in India”.
Firstly, some random thoughts on key drivers & opportunities for SaaS startups within India :
- Mobile first market : major adoption & growth of enterprise apps on mobile will happen (See this superb presentation by Emergence Capital)
- Vast number of small and medium businesses (in tens of millions). Less friction in SMB due to lack of legacy (& on-premise) systems -i.e. less hurdles to get them to move to cloud. And they are always looking to cut cost and improve productivity.
- Medium sized businesses or emerging corporates transforming with new generation (possibly overseas educated) taking over ; hiring professional management ; open to investing in technology
- 4G rollout and digital infrastructure initiatives by government (important from perspective of B2B2C – SaaS vendor whose clients are businesses that serve consumers)
- Massive e-commerce market (opportunities for SaaS companies that cater to e-commerce vertical)
- Industries like healthcare starting to adopt to new technologies and innovations ; their own businesses undergoing rapid change to meet the demand of a highly connected, internet savvy, quality conscious, choice seeking consumer with information on the tip of his or her finger literally
- Young industries like e-commerce, on-demand, logistics, shared economy invest heavily in technology and have no hesitation in picking off-the-shelf products for faster time to market and scale
Add to this the following :
- Very large resource pool with some incredibly talented dev and engineers with global experience who have returned to India
- Cost of going from idea to MVP relatively low : almost 1/3rd compared to the US
- Capital allocation to SaaS startups among angels, seed funds, early stage VCs has gone up significantly and most seed funds, VCs now have a clear vision & mandate to invest in SaaS. This is likely to grow year on year. Increased inbound M&A action in B2B tech has increased the chances of exits for investors and acquisitions can happen fairly early.
- Rapidly developing startup ecosystem made up of communities, meetups, funding platforms, mentor programs, events, startup focused service providers, etc.
I could go on about the opportunities but let me step back and highlight some of the challenges (some of which are very local) :
- limited choice of payment gateways and ease of integration
- inability of vendors to collect recurring payments using credit card online, on a monthly basis. This creates limitations for self-serve SaaS startups.
- “Consumerisation of enterprise“ as described beautifully by David Skok or stealth IT practically does not exist. (And I don’t see this changing very soon)
- hiring talent for startups is incredibly tough and retaining them is even tougher
- limited pool of UX experts and SaaS is all about user experience
- reaching out and selling to SMBs is just very tough. Inbound marketing & inside sales will have very little or no impact – these companies will typically not have a CIO so owners take decisions – getting to them and winning their trust is very very difficult. A lot of education is required, long sales cycles, possible payment delays & defaults(imagine dealing with churn and defaults)
- data security concerns
- large corporate decision makers are very “brand” conscious so entry barriers for startups is very high.
While these are just challenges and can never stop true-blue entrepreneurs, a few Indian SaaS startups have taken another very attractive route – going global very very early on.
That’s the beauty of SaaS. There are no geographical boundaries.
All in all, there are amazing opportunities today for young entrepreneurs to start innovative B2B SaaS companies from India and be very successful. Whether India specific SaaS or global SaaS.