An insightful interview with Navin Honagudi, Investment Director at Kae Capital
Q. Tell us briefly about your fund, its focus and current investments and specifically B2B SaaS.
A. Kae Capital is an early stage fund focused on technology investments in the B2C and B2B space. Some of our B2B SaaS investments include Nudgespot, Shephertz, Syscloud, Airwoot, etc.
Q. How much importance will your fund have on enterprise tech especially SaaS going forward?
A. Our fund will continue to strongly focus on SaaS investments. It is one of our top spaces for investment.
Q. Do you see a sudden increase in B2B tech startups?
A. Not really. While there has been growth it has been steady and I would not say a sudden increase.
Q. Many seem to think India as a market, does not have the right environment for SaaS startups to bloom (including customer maturity) – do you agree?
A. Yes and No. Yes because there is talent available to build a SaaS company out of India. Freshdesk is clear example. No since India is a much smaller market compared to US.
Q. What are some of the SaaS cos in your portfolio and what are their areas of focus in terms of markets & customers?
A. Some of our B2B SaaS investments include Nudgespot, Shephertz, Syscloud, Airwoot etc. In terms of market their focus has been on US given it is a much larger and mature market as compared to India.
Q. There were several hundred acquisitions in the SaaS space in the US last year and quite a few outbound but barely any from India, I have heard buyers get put off due to the difficulty of completing a deal in India. Is that why SaaS startups move to Singapore?
A. I am not sure if this a major reason. When you are a SaaS company it makes you global from day 1. Hence it makes sense to incorporate your company outside of India. We are seeing acquisitions of even India incorporated SaaS companies.
Q. Are you seeing SaaS startups that are doing innovative stuff other than the usual marketing tech, sales automation, HR, etc?
A. While we are seeing innovative companies I think it would be unfair to generalize companies focused on marketing tech, etc. There is still a lot of innovation that can be done in these spaces. Two of our portfolio companies are focussed on this space.
Q. What do you think of SME or SMB SaaS opportunities in India?
A. I feel while most of them have high quality product they lack in GTM and building a sales engine. The founders need to build the next level of talent for sales and beyond a point company should not depend on only the founders selling the product.
Q. What is the funding environment for SaaS startups in India – from seed to series A VCs and up the value chain? How easy or difficult is it for SaaS founders to get funded vis a vis consumer tech?
A. I think for quality teams and products funding at Seed and Series A is not a large challenge however beyond a few companies we have not seen Series B+ funding in India. Only a handful of companies have been able to build a large sustainable business. Yes funding available for consumer tech is definitely much larger than SaaS. Atleast that has been the trend for the last few years.
Q. And what does the exit horizon/options for investors look like considering there are no SaaS IPOs and M&As locally?
A. Interestingly we are seeing smaller exits for SaaS companies which is a positive for this space. We are seeing large companies like Twitter, Yahoo and few homegrown companies like Freshdesk, Book Myshow making sub $50 Mil acquisitions.
Q. What are some of the key points to consider or a must do for SaaS founders in India with global products / markets?
A. Key points are building a enterprise grade product equivalent to your western counterparts and building a robust sales engine.