SaaS companies and digital apps raised around $2.10 billion in funding between January and October compared to $1.70 billion in 2019, according to data by Tracxn.
Top fund-raising rounds include SaaS startups Postman ($150 million), Freshworks ($250 million), High Radius ($125 million), and digital apps like Pine Labs ($85 million) and Khatabook ($60 million).
"The pandemic has changed the way businesses approach customer engagement. It accelerated the need for tools that enable businesses to connect and serve customers, irrespective of where their customer-facing teams are based," said Sidharth Malik, chairman, Freshworks India, that provides customer engagement software for businesses.
In June, Postman joined the unicorn club with a $150 million fund-raise, becoming the fourth Indian SaaS company to enter the unicorn club after FreshWorks, Druva and Icertis. Among the four, Postman has been the fastest to get there, taking six years to be valued at over $1 billion.
Investors such as Tiger Global and Sequoia, which have funded large unicorns such as Flipkart and Ola, are also backing startups in this space.
“…Being asset light, having recurring revenue models and quick adoption makes them attractive for investors that are funding these companies these days," says Jatin Desai, managing partner, Inflexor Ventures.
Potsman and Freshworks, which serve a global market, are expected to be on a growth run in the foreseeable future.
Venture capital firms invested $32 billion globally in 2019 in SaaS companies demonstrating the faith they have in their growth, according to a recent Nasscom report, Desai added.
Analysts said the digital transformation accelerated by the pandemic has provided the tailwinds to this sector.
“Digital transformation that companies are going through is triggering a greater need for Saas startups to support these requirements for both consumers and businesses. To serve the B2C wave, a fair amount of tech, software and solutions is needed and enterprise apps is doing exactly that, so the growth and investment in this sector is not surprising," says Ankur Pahwa Partner and National Leader – E-Commerce and Consumer Internet, EY India.
The pandemic has boosted these plug-and-play solutions, which are mainly software and customer management solutions.
“Digital adoption is in many ways on steroids and that is helping these companies with their differentiated software solutions coming to the fore," added Pahwa.
Ledger management mobile app Khatabook that started 18 months back helps small businesses digitize their accounting process, and has seen increased adoption of the app by merchants.
“With Khatabook, it is the first time that small Indian businesses have started using software. We help Indian SMEs maintain their ‘bahikhata’ and digitize that with an Android app," Ravish Naresh, co-founder and CEO Khatabook said.
Currently, Khatabook has 9 million monthly active merchants (users). From kirana stores to mobile recharge shops, garment dealers and jewelers, Khatabook serves over 500 types of businesses in India, with the app being available in 11 regional languages. Going ahead, Naresh said that the company will leverage its digital distribution to start digitizing other operations inside the shop.
“Khatabook is creating data repositories and housing very valuable data which can be used to create ancillary products and solutions that are very relevant to the ecosystem...Companies like Postman and Khatabook are on a different market trajectory but both have their place in the sun, spurred by the digitization wave and adoption, which has now also got strong covid tailwinds," said EY’s Pahwa.
Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.
Never miss a story! Stay connected and informed with Mint.
our App Now!!