SaaS Spreads to India and Beyond

8/6/12Follow @sramana

Software as a service is a thriving and still growing industry with dozens of multi-million dollar companies making their mark around the world. According to Gartner, global spending on the Software-as-a-Service (SAAS) market is projected to grow 17.9percent in 2012 to $14.5 billion and is projected to be worth $22.1 billion by 2015. IPOs and acquisitions abound, making it an attractive market for both entrepreneurs and investors to play in.

Workday, a human resources, payroll, and financial management solutions provider, filed for a $500 million IPO at the end of July 2012. Workday may also be on Salesforce.com’s radar as a possible acquisition target, since SAP acquired SuccessFactors and Oracle acquired Taleo. It will be interesting to see how things work out.  HubSpot, which provides an all-in-one inbound marketing software platform for small and medium businesses, earned $29 million in revenue in 2011 and made two strategic acquisitions. In June 2011, HubSpot acquired marketing software company Performable, and in August of that same year, acquired social business management platform Oneforty.

ON24 provides cloud-based webcasting and virtual communications solutions. The company reported revenue of $50 million in 2010 and has expanded its horizons to the international market. In June 2012, ON24 acquired Madrid-based IMASTE, the largest virtual-events company in Europe. These companies all have bright futures ahead of them, whether they opt for IPOs or not. Founded in 2006, Marin Software provides an online advertising management platform for advertisers and agencies. Marin Software’s tools allow advertisers to manage workflow, reporting and optimization needs. In 2011, the company earned more than $36 million in revenue and expects to earn that much plus $18 million in 2012. By mid-2012 Marin’s management team confirmed that it is looking to choose bankers for an IPO by September or October.

There are some promising software-as-a-service companies in the One Million by One Million portfolio, too. We have chosen three of them to showcase as examples of a trend that we find quite intriguing: SaaS startups cropping up in India. Online customer acquisition techniques make it viable for Indian SaaS players to compete in the global market, and it is a category that VCs and angels have embraced actively.

First up is Freshdesk, a SaaS company that provides small and medium businesses with on-demand customer support software that offers multi-channel social support. Founded in 2010, Chennai-based Freshdesk was a finalist in the Microsoft BizSpark India Startup Challenge in 2011.

Freshdesk co-founder Girish Mathrubootham got the idea for the company from a post in Y Combinator’s Hacker News. The post mentioned that a major player in the SaaS  support space had raised its prices. Mathrubootham saw that as an opportunity to provide small businesses with credible customer support software at an affordable price. Freshdesk has since grown into a robust company. In the two years since its inception, Freshdesk has raised two substantial rounds of funding. In October 2011, the company raised $1 million in a Series A round from Accel Partners. In April, Accel Partners stepped up again, teaming with Tiger Global Management to offer Freshdesk $5 million in Series B funding.

A platform-as-a-service company, OrangeScape was founded in 2003 with the intention of simplifying business application development. The company gained traction with the help of a Chennai manufacturing company for which OrangeScape built an HR application. Slowly but surely, the company grew, and in 2009 earned its first $1 million in revenue.

What caught my attention as I started working with OrangeScape is their proven ability to plug a distinct gap in Google’s enterprise solution. As you know, the Google productivity apps portfolio is … Next Page »

Sramana Mitra is the founder of One Million by One Million (1M/1M), a global virtual incubator that aims to help one million entrepreneurs globally to reach $1 million in revenue and beyond. She is a Silicon Valley entrepreneur and strategy consultant, she writes the blog Sramana Mitra On Strategy, and is author of the Entrepreneur Journeys book series and Vision India 2020. From 2008 to 2010, Mitra was a columnist for Forbes. As an entrepreneur CEO, she ran three companies: DAIS, Intarka, and Uuma. Sramana has a master’s degree in electrical engineering and computer science from the Massachusetts Institute of Technology. Follow @sramana

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  • Sarkar

    Great story, the Indian SaaS space is definitely growing rapidly – other than the startups mentioned in the story, Zoho has to be appreciated for initiating this thrust, some of the other Indian start ups I like are Interviewstreet, ClickDesk and Extagram.

  • deepika rawat

    Thank you

    This blog is very knowledgeable Online
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