From SaaS to Consumer to Deep Tech, India’s Next-Gen Startups are Building for the World
PublishedAugust 16, 2023
We can’t be more excited about the next phase of India’s startup ecosystem, which has now squarely laid its sights on the $100 trillion global economy.
On January 3, Bangalore-based Digantara hitched a ride on SpaceX’s Transporter-6 mission to launch a micro-satellite designed to help astronauts and telcos navigate the massive sprawl of space debris now orbiting earth. The same week Skillmatics, an educational toy startup based in Mumbai, reported the company’s revenue run rate hit $32 million in 2022, up 100% over the year before, thanks to rocketing sales in North America.
While these two startups might seem worlds apart, their respective milestones signal an exciting shift taking place in India’s startup ecosystem. Five years ago, the majority of startups launched in India focused on building products and services for the domestic market. Today, they’re building for the world.
Our research shows that 40% of Indian startups that received seed funding rounds between $500,000 and $5 million in 2022 are building for global markets. The majority are building software, across categories, but we’re starting to see more internationally-focused consumer brands and B2B commerce companies too. The new wave of AI startups will only accelerate this trend. We believe that over 50% of new startups launched in India will be global from Day One.
Software for the world
The first wave of Indian IT services companies, which are now 30 to 40 years old, created an industry that today generates over $200 billion of revenue and established global leadership. Demand for talent from the IT services industry sparked explosive growth in India’s STEM education system; these tailwinds gave rise to a large population of highly talented software developers. Around 2010, India’s SaaS sector began to take shape. Companies like Freshworks, Druva and Chargebee built on the early success of pioneers like Zoho and laid the foundation for a new generation of founders who are building software products for the world.
What started off as a small band is now a large army. GitHub predicts that their user base in India, which grew 35% to 9.75 million last year, will match the US developer population by 2025.
These seasoned Indian engineers are building for their own pain points and shaping the future of software. For example, Sachin Jain, Sagar Soni and Sahil Gupta – software engineers whose collective careers span Adobe, Grofers/Blinkit and Oyo – launched Requestly, an open source SaaS platform that helps developers test and debug web applications in real time. Their product has struck a chord with front-end developers and QA engineers, who often have to rely on back-end programmers to test scenarios. Over 175,000 engineers from 200 of America’s Fortune 500 companies have signed up in the space of just one year.
We’re seeing this play out across vertical SaaS, developer tools, modern data stack, IT infra, cybersecurity, AI and many more categories.
Five years ago, India had no SaaS unicorns. Today there are more than 1,000 funded SaaS startups and 14 unicorns building software products for the world. McKinsey and SaaSBoomi predict that India’s SaaS industry could reach $1 trillion in value and create nearly half million new jobs by 2030.
Consumer brands for the world
The number of D2C brands has grown sharply in India in the last few years, driven by the rapid growth of ecommerce and a new generation of entrepreneurs with unique insights into the needs of Indian customers. Building on this early success, founders are now moving into global markets.
In 2022, exports by Indian brands on Amazon.com crossed $2 billion, with most of those sales coming from the US. Access to Amazon and other platforms are spurring Indian entrepreneurs to build brands across categories, such as beauty, personal care, fashion, food and home, for global markets. Skillmatics, for example, made its first foray into the US through Amazon India’s global selling program and is now on shelves in stores like Target and Walmart. Today the company distributes its products to 15 international markets. Minimalist, a skincare brand with a significant business in India, is also expanding into regional markets, including the UAE.
IP for the world
What’s incredibly exciting is the rise of deep tech and hardware startups in India. In the last 12 months, we’ve met dozens of companies who are developing cutting-edge intellectual property, including Digantara, which has built a patented in-orbit space debris tracker that can tell us where objects as small as 1 cm are headed, and Metastable, which is pioneering the world’s first chemical-free end-to-end recycling process for Lithium-ion batteries with zero waste generation.
The Indian government, meanwhile, is making moves to make the country more self-reliant on semiconductor chip supply, and startups are stepping up to the plate – including InCore Semiconductors, which is helping shape the future of custom silicon chips, and Mindgrove, a startup that designs ‘system on chips’ that offer best-in-class performance with low power.
For years, entrepreneurs focused on innovating for India’s $3.5 trillion economy. Their energy and ambition helped turn India into the third-largest startup ecosystem in the world. We can’t be more excited about the next phase of India’s startup ecosystem, which has now squarely laid its sights on the $100 trillion global economy.
A version of this column previously appeared here in The Economic Times on August 2, 2023.
Five years ago, India had no SaaS unicorns. Today there are more than 1,000 funded SaaS startups and 14 unicorns building software products for the world.