As the Indian SaaS ecosystem continues to mature, AI and efficiency are emerging as key themes for cloud growth in India.

1. Rise of SaaS
in India 2023
Anant Vidur Puri Anurag Begwani Moksha

2. INDIA SAAS MARKET SIZE
Source: Venture Intelligence, Industry Reports, BVP analysis
India’s SaaS market continues to inflect
1 2 2
5
8
11
13
25
35
0
10
20
30
40
50
2016 2017 2018 2019 2020 2021 2022 2025F 2027F 2030F
50
By 2030,
India’s SaaS market size
is forecasted to reach
$50B
in ARR
ARR, $B

3. India SaaS continues to go from strength to strength
Source: BVP Analysis
TWO KINDS OF BUSINESSES:
INDIA-FIRST AND GLOBAL-FIRST
Indian founders, targeting global customers from
day 1; team split globally with majority in India
Indian founders, start selling in India, expand to
SEA/MENA; opportunistic global expansion
India-first
Bessemer
investment
CUSTOMERS
TEAM
EXAMPLES
Global-first

4. India SaaS centaurs and unicorns are set
to bring in $20 to $25 billion in revenue by 2030
Source: Private Circle, BVP analysis
India-first Global-first
ARR, $B
0.6
1.5
2.4
3.0 3.8
17.0
CY10 CY19 CY20 CY21 CY22F CY30F
0.0
0.4
0.6
0.9 1.1
5.0
CY10 CY19 CY20 CY21 CY22F CY30F

5. >$100M ~2 ~9 ~11
$50-100M 1-2 ~12 ~16
$20-50M 2-4 ~20 ~25
$10-20M 8-10 ~30 ~35
$5-10M 15+ 50+ 60+
$1-5M 15+ 100+ 150+
2015 2021
NO. OF COMPANIES AT DIFFERENT
REVENUE RANGES
Source: Tracxn, Venture Intelligence, Pitchbook, Industry Reports, BVP analysis
India SaaS companies are becoming
mature and reaching scale
2022

6. BUT WAIT:
The SaaS world has
changed in 2023?

7. -60.00%
-50.00%
-40.00%
-30.00%
-20.00%
-10.00%
0.00%
Jan 03, 2022 Apr 29, 2022 Sep 20, 2022 Feb 02, 2023
Net Change
The SaaSacre of 2021 and 2022, seems to be stabilizing
-38.4%
EMCLOUD
-14.2%
NASDAQ
-8.3%
S&P 500
-6.7%
Dow Jones
Source: BVP Cloud Index (as of 6.30.23)
Jan-2022 June-2022 Jan-2023. June-2023

8. Over the long term, cloud markets have consistently
outperformed broader market indices
+588.5%
EMCLOUD
+277.2%
NASDAQ
+165.5%
S&P 500
+126.3%
Dow Jones
-200%
0%
200%
400%
600%
800%
1000%
1200%
1400%
Aug
16,
2013
Jan
09,
2014
Jun
04,
2014
Oct
24,
2014
Mar
20,
2015
Aug
12,
2015
Jan
05,
2016
May
27,
2016
Oct
19,
2016
Mar
15,
2017
Aug
07,
2017
Dec
28,
2017
May
23,
2018
Oct
15,
2018
Mar
12,
2019
Aug
02,
2019
Dec
24,
2019
May
19,
2020
Oct
09,
2020
Mar
05,
2021
Jul
30,
2021
Dec
21,
2021
Apr
20,
2022
Sep
16,
2022
Jan
24,
2023
Index Performance
Net Change
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Source:
BVP Cloud Index
(as of 6.30.23)

9. India unicorn creation continued in 2022,
but no new unicorns in 2023
Unicorn year 2022
9
There are no new Unicorns in 2023 as of March 31, 2023
#New unicorns
2018
2
2019
2
2020
6
2021
6
2023
0

10. 0.75
1.43 1.72
4.81
6.02
0.3
127
236
300
513
453
96
0
100
200
300
400
500
600
0
1
2
3
4
5
6
7
8
2018 2019 2020 2021 2022 2023
Total Funding in
USD Billion
1
Venture dollars, on a steady rise until
2022, have slowed down in 2023
TOTAL INVESTMENT IN INDIAN
SAAS STARTUPS
Source: Tracxn, Venture Intelligence, Pitchbook, BVP analysis 1. As of June 30, 2023

11. A RARE BREED
$100M ARR
with ARR defined as annual
recurring or subscription
revenue
Centaurs are unaffected
and continue to grow!
Getting to
$100M ARR is
the aspirational
standard for
SaaS companies
Revenue is an internal metric and remains
unaffected by market externalities
Source: BVP analysis – centaur list may not be exhaustive as several companies do not publicly reveal centaur status

12. 0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
0x
5x
10x
15x
20x
25x
30x
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
2020
2019
2017
2014 2015 2016 2018 2021 2022
10-Yr US Treasury yield
Avg EMCLOUD EV/NTM Rev multiple
10.21x
(10yr avg,
trailing)
12.99x
(5yr avg,
trailing)
7.43x
(5yr avg,
2013-2018)
MAJOR HEADLINE OF THE YEAR:
Hiking interest rates has led to cloud multiple compression
Source: CIQ, FRED
3.5%
6.4x
2013

13. If US Interest Rates increase
from 3% to 6%, a perpetuity
growth model with 2% terminal
growth (~ US GDP growth) could
reduce the future terminal value
(TV) of the business by 75%.
Most of the intrinsic value of the
business usually lies in the TV
and hence value of the business
has fallen to 1/4th.
In this example the effective
multiple becomes 1/4th with a 3%
hike in interest rates.
Indicative calculations to demonstrate a concept
INTEREST RATES INVERSELY
CORRELATED TO VALUATIONS
UNDERSTANDING WHY:
Interest Rates
Cash flows ($ M)
Year 1 100
Year 2 120
Year 3 140
Year 4 160
Year 5 180
Scenario 1 Scenario 2
Growth rate (g) 2% 2%
Interest Rate
(r)
3% 6%
Terminal Value
($ M)
18,360 4,590

14. Today, investors are looking,
more than ever, to maximize
their equity returns; boards all
over the world are looking to
maximize shareholder value.
Shareholder value usually
increases with growth in the
business’s free cash flows or
growth in revenue (which would
usually mean future growth in
cashflows).
TLDR:
Everyone is looking for
businesses with high cash flows
or high growth.
Indicative calculations to demonstrate a concept
Expected return from investments
increases in a high interest rate environment
Higher Interest
Rates
=
Higher Return
Expectations

15. WAIT, WHERE HAVE WE HEARD
THAT LAST LINE BEFORE?
Efficiency
=
Growth + FCF%

16. Higher steady stage growth or
cashflows, both mean more
shareholder value and better
returns for Founders, Investors
and Shareholders
Higher efficiency companies will
generate higher shareholder
returns and will be more sought
after than lower efficiency
companies
Shareholder returns correlated
with higher efficiency as it
represents a better sustainable
business outlook
Efficiency is a proxy for sustainable
growth or cash flow
SUSTAINABLE FREE CASH FLOW
How much cash flow will you
generate if you stop increasing
investments in growth?
SUSTAINABLE RATE
OF GROWTH
How much will you continue to
grow if you decrease
investments to become CF+ve?

17. *Linear correlation, tested for statistical significance (using correlation test https://www.statology.org/correlation-test-in-excel/)
for 66 constituents of the EMCloud Index i.e. https://cloudindex.bvp.com/. Data as of 23rd June 2023
Efficiency makes the EMCloud revenue
multiples tick
0.0x
5.0x
10.0x
15.0x
20.0x
25.0x
-40.0% -20.0% 0.0% 20.0% 40.0% 60.0% 80.0%
The median EMCloud company
has ~30% efficiency –
theoretically, these companies
can generate a 30% sustainable
growth rate or 30% stream of
cashflows at steady state.
EMCloud revenue multiples are
strongly correlated with
efficiency (~60% corr coeff*).
Median multiples by different
range of efficiencies
• <10%:
2X ARR (range 1x to 4.5x)
• 0-20%:
4.2X ARR (range is 2.1x to 13x)
• 20-40%:
6.2X ARR (range is 2.3x to 18.1x)
• >40%:
11X ARR (range is 7x to 21x)
If your revenue is <$25M, focus
instead on Net New ARR/ Net Burn
• Aim to be at least at 0.7,
ideally >1
EFFICIENCY V/S FORWARD
REVENUE MULTIPLE*

18. GROWTH FCF EFFICIENCY
36.8% 5.1% 41.8%
27.8% 14.1% 41.9%
4.2% 37.6% 41.8%
Efficiency balances for different
company profiles – if you’re a
100% grower, you’re ok to lose
50% but if you’re a 10% grower,
you should be generating
substantial profits.
Intuitively – adding 100%
revenue by burning 50% of
revenue means there is
sustainable multi-year path to
cash flows and continued
growth.
Intuitively – adding only 10%
revenue without generating 20-
30% cash flow means this
business is not sustainable over
the years.
Every “rule of 40” is not the same
Efficiency comes in many forms
Source: BVP cloud index i.e. EMCloud Index i.e. https://cloudindex.bvp.com/. Data as of 23rd June 2023

19. 2023:
Year of the
efficient entrepreneur

20. Faster payback cycles and ability to
get to $100M+ARR with <$100M
equity capital
30%
72%
140%
100%
70%
0%
20%
40%
60%
80%
100%
120%
140%
160%
Global SaaS (Cloud
Index)
Global SaaS India SaaS India SaaS India SaaS
MEDIAN EFFICIENCY SCORE
~10-30M ARR ~10 M ARR ~25 M ARR
(BVP Portfolio)
Data (N = 30) for Indian
companies growing >70% YoY.
Source: BVP research; for
companies with >30M ARR,
efficiency = growth + FCF%; for
companies with <30M ARR
efficiency = Net New ARR/Net
Burn. BVP Portfolio data is
historical and indicative.
Indian SaaS companies at an advantage
due to efficient growth across stages
50-100M ARR

21. BESSEMER POV:
The India SaaS model
is stronger than ever
before

22. Bootstrapping and selling by engineering
Source: https://www.paddle.com/studios/shows/protect-the-hustle/freshworks-girish-
mathrubootham-on-building-a-multi-product
Shailesh Davey, Co-founder and CTO, Zoho
A multi-product approach is core to Zoho’s business strategy. Having
multiple products enables us to sell vertically integrated solutions to our
customers and expand horizontally into adjacent departments with the same
customers. This creates the conditions for exponential revenue growth and
for us to solve more of our customers’ pain points. While we may not be able
to address every need of every customer, we can meet a broad set of needs
for most customers. At Zoho, we call this strategy, “Selling by Engineering.
This approach has been critical in our journey of having bootstrapped the
business.
“
Highly efficient businesses
can bootstrap their way to
over $1 billion of revenue.

23. “
D Venkatesh, Founder
Ability to go to market with an efficiently built,
near-final version of the product
Source: BVP Interviews
“
Domain expertise
cultivates trust, propels
partnerships, and fuels
product depth.
We brought a nearly finished product to the market and collaborated with a
prominent private bank, focusing on their requirements, enhancing our product's
capabilities. By demonstrating a 10x ROI with one loan product, we secured
additional product opportunities with the bank and gained multiple new bank
customers. We raised capital only after we demonstrated the ROI to our first
few customers.

24. Surjendu Kuila (Co-founder & CEO) and Mayank Gupta (Co-founder & COO)
Rapid, nimble iterations towards
continual product-market fit
Source: BVP Interviews
“
Enterprise customers
expect the capability to
consistently address and
resolve their pain points.
In our embedded insurance journey, we listened, engaged, and iterated over
15 times in 12 months. By engaging and learning from experiences of
insurance providers, businesses, and users, we gained invaluable insights.
These insights shaped our refined product, meeting the unique demands of
our customers.

25. During the initial years, as we honed our product and expanded our
customer base, our growth closely mirrored industry averages. However, as
trust from banking and insurance customers and product adoption surged,
our annual growth rate soared to an astounding 80%+ CAGR for five
consecutive years, solidifying our market position.
V.R. Govindarajan, Co-Founder
Compounding growth through
high expansion revenue
“
The fusion of product
depth, customer trust, and
strategic expansion leads to
significant compounding.
Source: BVP Interviews

26. Indian companies’ efficiency
advantage will aid them on their
path to global leadership
PREDICTION 1

27. An efficiency advantage will help India
SaaS companies become global leaders
HORIZONTAL VERTICAL SMB
DEVELOPER/DATA TOOLS
PREDICTION 1

28. BESSEMER POV:
The India SaaS buying
opportunity continues
to be lucrative

29. Connected
Mobiles
1.2B
Aadhar Pay
1.3B
UPI
$182B
TRANSACTION VALUE
PER MONTH
GST
$19B
GROSS COLLECTION
PER MONTH
Connected
bank accounts
1.2B
eKYC
325M
PER MONTH
India’s financial services digital
stack continues to compound
Source: BVP Desk research, MPCI, GST Council, RBI, UIDAI
Fully inter-connected
and inter-operable digital infrastructure
INDIA
STACK

30. The monolithic banking stack is going
through a “lightening” transformation
UNBUNDLING LEADING TO
LIGHTENING OF THE CORE
Source: BVP Desk Research, indicative and illustrative graphic to explain a concept
PRESENTATION
LAYER
Client Application
Browser
G.U.I.
APPLICATION
LAYER
Load balancer
NodeJS
application
Cluster parent
User
Thread
s
Posts
Libreries &
dependencies
APPLICATION
LAYER

31. DISTRIBUTORS
Source: BVP Analysis and Research
Opportunity to build new, modern, cloud
infrastructure for financial services
MANUFACTURERS
• Capital is a raw material:
lowest cost of capital drives success
• Brand and physical distribution
are biggest moats
• Multiple players co-exist,
not a winner take all
• Large institutions have advantage on cost
of capital, brand, and distribution but lack
technology
• Enablers are bridging the technology gap
for incumbents
• Reach, brand, and technology integrations
drive success
• Extremely capital-intensive
• Margins for distributors are low and
compressing
• Distributors are trying to manufacture to
increase margins
• Enablers are emerging such that every
company can now be a distributor
ENABLING MANUFACTURERS DEMOCRATIZING DISTRIBUTION
BANKS
INSURERS
AMCS
WEALTH
MANAGERS
RESELLERS
BROKERS
DSAS
COMPARISON
PLATFORMS

32. New cloud infrastructure
will emerge to power
traditional financial services
PREDICTION 2

33. ENABLING MANUFACTURERS DEMOCRATIZING DISTRIBUTION
New cloud infrastructure will emerge to power
traditional financial services
Source: BVP Desk Research
PREDICTION 2

34. UPI fueling Indian payments
to a $1 trillion market
Digital P2M market growing 34%
annually, primarily off UPI
Source: CLSA P2M: Peer to merchant
$120
$450
$1,200
2018 2022 2026F
34%
44%
62%
98%
56%
38%
2018 2022 2026F
UPI share Non UPI share
SHARE OF UPI IN DIGITAL
P2M PAYMENTS
INDIA'S DIGITAL
P2M MARKET ($B)

35. UPI will create SaaS
and infrastructure opportunities
across a wide spectrum
PREDICTION 3

36. UPI INFRASTRUCTURE CREDIT ON UPI
UPI will create SaaS and infrastructure
opportunities across a wide spectrum
PREDICTION 3
UPI in a box:
Ready to use technology stack to accept
UPI payments
Observability Platforms:
API monitoring technologies to drive
enhanced performance
UPI switch:
Technology layer consuming & exposing APIs for
successful UPI transactions
Loyalty & Rewards:
Technology companies building loyalty
stacks for credit card issuers
Fraud Management:
Advanced solutions for proactive fraud
prevention and detection
Card issuance as a service:
Technology
stack to issue physical/virtual cards
1.
2.
3
.
1.
2.
3
.

37. REGULATORY CHANGES
IN INDIAN PHARMA
Section 194R for pharma
Free samples, event attendance and other
benefits provided to doctors by pharma will be
taxed at 10%, as per updated regulation in 2022
Increased income-tax scrutiny
Large Indian pharma players have faced actions
from Income Tax department over the past few
months
“The claim of any expense incurred in providing benefits
that are in violation of the Indian Medical Council
(Professional Conduct, Etiquette and Ethics) Regulations,
2002, shall be inadmissible as a deduction as it is an
expense prohibited by law”’
INCOME TAX DEPARTMENT, INDIA
IMPLICATIONS ON PHARMA
SALES & MARKETING
Rise of innovative marketing channels
Drug promotion to doctors will be redefined in
the coming years; shift towards omnichannel
marketing expected
Shift in doctor’s mindset
Doctors will welcome digital interactions with
pharma companies over physical interactions
“Due to the current situation and changing business
dynamics, pharma entities need to focus on high-end
innovation and that too within a short span of time.
Therefore, pharma players must invest in the best of
technologies and employ top experts to stay ahead on the
innovation curve.”
GRANT THORNTON, CIPLA
Regulatory tailwinds will accelerate
technology adoption in Indian pharma
Source: Interactions with industry experts, BVP research

38. Indian Pharma will move
forward on the wheels of
cloud software
PREDICTION 4

39. Indian Pharma will move forward
on the wheels of cloud software
SALES AND MARKETING
Doctor engagement
Advertising
Patient
Engagement
Data insights for field force productivity
Digital detailing
R&D AND PHARMA [CO-VIGILANCE] SOFTWARE
MANUFACTURING INSIGHTS
Laboratory Management
tools
“We have made a targeted methodical vision to make a difference to business trajectory through digital interventions …..
Digital is embedded in business planning and executions. For instance, we have a target of moving the entire field force
to a digital detailing platform in the next 12 to 15 months.”
JOINT PRESIDENT AND GLOBAL CFO, CIPLA
Clinic
Management
Procurement
INDUSTRY OUTLOOK ON TECHNOLOGY ADOPTION
PREDICTION 4

40. Indian founders are
rapidly adopting AI

41. chatGPT
Instagram
Spotify
Facebook
Twitter
Netflix
0 500 1000 1500 2000 2500 3000 3500
100
102
104
106
108
Number
of
Users
Days Source: UBS Research
AI will transform
how we live,
work, and
interface with
machines
Even if you’re living in a cave, you’ve seen the side
project that became the fastest growing app in history

42. 0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
I
n
d
i
a
B
r
a
z
i
l
U
S
A
U
K
G
e
r
m
a
n
y
F
r
a
n
c
e
C
a
n
a
d
a
N
e
t
h
e
r
l
a
n
d
s
P
o
l
a
n
d
India has largest
percentage of developers
using AI
Indian developers are embracing AI
Source: https://stackoverflow.co/labs/developer-sentiment-ai-ml/
PERCENTAGE OF DEVELOPERS
WHO USE OR PLAN TO USE AI

43. CONTRIBUTION TO AI
PROJECTS BY COUNTRY
Source: OECD.AI (2023), visualisations powered by JSI using data from Github, accessed on 20/6/2023, www.oecd.ai
35%
30%
25%
20%
15%
10%
5%
0%
35%
30%
25%
20%
15%
10%
5%
0%
2011
2012
2013
2014
2015
2016
2017
2018
2019
20
2021
2022 Date
% of total AI projects
India is the leading hub of open-source AI projects
United States
EU (27)
India
United Kingdom
Germany
China
Canada
Brazil
Japan
France

44. 23%
15%
7%
31%
24% Greater Efficiency
Improve accuracy in coding
Improve collaboration
Increase productivity
Speed up learning
Source: https://stackoverflow.co/labs/developer-sentiment-ai-ml/
Indian developers see greatest
benefits in productivity and
efficiency
Indian developers are seeing value
from AI across multiple dimensions
BENEFITS OF AI AS PERCEIVED
BY INDIAN DEVELOPERS

45. 1. Building proprietary LMs
Mayank Goyal (Co-founder COO), Adit Jain (Co-founder CEO),
Anand Prajapati (Co-founder CTO) Source: BVP Interviews
At Leena.ai, we have harnessed the power of AI and large language models,
including our proprietary language model called WorkLM. WorkLM is specifically
trained for workplace scenarios, enabling our platform to understand employee
queries, provide accurate responses, and perform the requisite actions on their
behalf. It continuously learns and improves, adapting to user interactions.
AI-native companies have
to evolve to seize the
opportunity that large
language models and
generative AI have created.

46. 2. Scaling an AI-native use case to
productize a service industry
Ankur Edkie (Co-founder CEO), Sneha Roy (Co-founder COO) and Divyanshu Pandey (Co-founder CBO)
Source: BVP Interviews
At Murf, we believe that the key to staying ahead in this fast evolving AI space is
to be constantly innovating. In this way, we can be at the forefront of speech
technology and keep our efforts rooted in solving real customer problems. That is
why our engineering, product and research goals are all backed by direct
customer asks and problems.
“
AI-native companies need
to continuously evolve
and adapt to maintain
superior performance.

47. Initially, with our product Affect Lab, we enabled powerful insights for CMOs,
but soon realized the demand for these insights extended to CPOs as well,
leading us to develop Affect UX. Recognizing the importance of a unified
platform, we further expanded our offerings with Decode and Catalyst,
providing a comprehensive solution for user research and interviews.
3. Analytics and insights businesses
can use AI to deliver a full-stack experience
for their customers
Ranjan Kumar (Co-founder CEO), Lava Kumar (Co-founder CPO),
Bharat Shekhawat (Co-founder Head of Engineering)
Source: BVP Interviews
Meet full-stack
customer needs by using
AI to go beyond just
insights and data.
“

48. 4. Creative businesses can strengthen PMF
by adding AI-native workflows
and empowering creators
Rishabh Shekhar (Co-founder COO) and Anirudh Singla (Co-founder CEO)
Source: BVP Interviews
With the power of AI,
we are re-imagining
possibilities of what
customers want and how
we can serve them.
At Pepper Content, we are a content company that firmly believes in the
transformative power of AI. We’ve combined AI and content expertise to
redefine how businesses connect with their audience. Our platform, powered by
Peppertype.ai, streamlines content management from strategy to analytics, all in
one tool.

49. 5. Application software businesses
can reinvent the core product through AI
Atul Poharkar (Founder CEO)
“
Reinventing mobile
e-commerce through the
power of AI.
At Plobal Apps, we use AI to speed up the app creation process, allowing us
to build customized mobile apps for e-commerce brands in minutes. Our AI
not only automates the app building but also powers our full-stack service,
helping to promote the app and optimize its performance. By analyzing user
behavior and market trends, our AI enhances revenue, conversions, and
retention rates for our clients, driving 3X better conversions and 5X better
retention.

50. AI ENABLED SERVICES
India is well-positioned with its
services-heavy economy and depth
of AI talent
AI + Humans is the future
LLMs are just the beginning; this
is the AWS moment for AI.
Best-in-class companies will use a
combination of humans + AI to
automate, speed up, and increase
the accuracy of services.
Workflow, process automation,
and long-term specialization will
be new moats.
Every service will be automated
through AI + Software +
Workflow.
AI enabled content marketing platform
to improve productivity of content team
Emotion AI platform for
user/customer research
AI powered underwriting platform for
banks to improve credit productivity
and throughput
AI powered HR service delivery platform
to improve productivity of HR teams

51. AI-first companies
from India will lead the
productization of services
locally and globally
PREDICTION 5

52. AI-first companies from India will lead the
productization of services locally and globally
SALES, MARKETING, AND
CUSTOMER SUPPORT
HR AND IT CONTENT
OTHERS
PREDICTION 5

53. Five predictions for India SaaS
1.
Indian companies’
efficiency advantage will
aid them on their path
to global leadership
2.
New cloud infrastructure
will emerge to power
traditional financial services
3.
UPI will create SaaS and
infrastructure
opportunities across a
wide spectrum
4.
Indian Pharma will move
forward on the wheels of
cloud software
5.
AI-first companies from
India will lead
productization of services
locally and globally

54. Resources for India SaaS
founders and builders
Entrepreneurs building this
new frontier, email us:
indiasaas@bvp.com
BUILDER COMMUNITY
FOR BVP PORTFOLIO
ADVISOR NETWORK OF
RESEARCHERS AND
EXPERTS
COMMUNITY & TALENT
PLATFORM

55. Rise of India SaaS 2023
ANANT VIDUR PURI
RAJ SABHLOK
MOKSHA
ANURAG BEGWANI
VISHAL GUPTA
APARNA CHAGANTY