Eight Roads Ventures, the proprietary investment arm of financial services giant Fidelity, is sharpening its focus on Indian software startups, a space which has recently attracted many venture capital funds.
The sector-agnostic Eight Roads is closing two software-as-a-service (SaaS) deals in the coming weeks, three people aware of the matter said. It is leading a $40 million round in FarEye, which provides logistics software for carriers and shippers; and a $25 million round in mobile marketing and analytics platform MoEngage, the people said on condition of anonymity.
Eight Roads did not respond to emails while FarEye declined to comment.
MoEngage confirmed the deal. “The latest round of funding will help us reach more brands and empower them with the next-generation customer engagement platform built for the mobile-first world that is easier to use, fully integrated and intelligent," Raviteja Dodda, founder and chief executive officer of MoEngage, said in an email.
Founded in 2014, MoEngage helps companies channelize marketing efforts and campaigns to potential customers via email, in-app messaging, SMS and web push notifications with auto-optimization.
FarEye helps logistics firms manage their supply chains and deliveries with its SaaS business model. It gives organizations real-time visibility and predictive intelligence to ensure on-time deliveries using mobility, data analytics and automation.
In the past decade, few investors have shown in interest in the SaaS sector, seen as less capital intensive than the consumer internet sector.
However, global investors such as Sequoia Capital, Tiger Global Management and Steadview Capital, besides Eight Roads have doubled down on the space over the past year.
Mint reported on 16 December that Sequoia is in talks to lead a $30 million round in SaaS firm Whatfix, which makes software adoption easier for companies. Eight Roads is also an existing investor in Whatfix.
“SaaS firms, which got funded 3-5 years ago, have done really well and grown with solid revenues without much capital. Conversely, VCs see that as a great opportunity to invest, which Tiger first started last year," said the first of the people cited above.
SaaS can be broken down into multiple sub-sectors—firms which can go global from day one, domestic solutions for small businesses, and verticalized solutions for each industry.
Many Indian software startups shifted base to the US a few years after operations seeing a large market and customers such as Fortune 500 companies, which are accustomed to paying for specialised technology solutions.
For instance, MoEngage, its rival CleverTap, and customer engagement firm Freshworks, are among a dozen SaaS firms which have large operations and a base in the US.
However, a more recent and emerging thesis is that Indian small and medium businesses are going online and more willing to pay for services, creating an opportunity for startups to cater to these businesses and investors such as Eight Roads to invest in these companies.
Eight Roads has been an active investor in India in technology startups as well as more traditional companies. It has 37 companies in its India portfolio so far, including online pharmacy PharmEasy, tea retail chain Chai Point, non-bank lender Northern Arc Capital, software firm Icertis and analytics firm Manthan among others.