FastForward Refresh: Global SaaS

As a part of the Fast Forward initiative, we wanted to publish a series of sector specific insights and thesis notes to help founders to get an idea of how we look at some of the sectors.?

Here's a refresh on my favorite sector - Global SaaS solutions from India! ????

Unleashing the Potential of Homegrown Solutions

As we forge ahead past the post-pandemic landscape and into a new recessionary quandary, global businesses have continued to prioritize digitization and embrace more flexible, innovative solutions to help boost both their topline growth and bottom lines. Digital transformation has extended across industries - well beyond traditional IT services

Today’s SaaS solutions are defined by cross functional collaboration, ease of use, and intuitive UI/UX flows. As companies of all sizes face the looming necessity of digitization and increased adaptation to remote working. Entrepreneurs in India have the opportunity to tap into this growth market (not just here but globally) with a substantial right to win - India with her deep domain expertise, cost-effectiveness, and strong customer resonance holds a unique competitive advantage. And we have seen success stories play out a few times now. Pioneers like FreshWorks, Zoho, Druva, and Zenoti have put Indian solutions on the map, proving the unmistakable promise of India-built Global SaaS solutions

Founding teams with a commitment to scalability coupled with a strong background in cross border sales, GTM motions and product development can make their mark on this rapidly evolving landscape. By focusing on deliberate capital allocation, building strategic moats, and attracting top talent we can capitalize on this massive multi-trillion dollar opportunity?

As we ramp up our WaterBridge Fast Forward program, wanted to share some insights on our view of the space

Sector Tailwinds - What’s cooking?

The ‘Built in India, for the world’ space has witnessed an interesting set of forces over the last few years. Throw some Gen-AI into the mix, supplement with increasing remote work pressure and add a sprinkling of well learnt GTM lessons and we’ve started seeing some positive growth

A few themes we have been seeing over the last months:

1. Maturing Ecosystem: The startup community now has a deeper list of seasoned founders and mentors that have shown how world class software can be built and more importantly SOLD from India. As a community we have emerged from the steep learning curve and can now scale our motions faster. Founders are increasingly on the ball when it comes to understanding SaaS motions, metrics and methods

2. Diversified Playbooks: Over the last 4 years, almost all Indian SaaS companies followed a more traditional approach - replicating Freshwork's success formula. Today, we bear witness to a broader spectrum of strategies, including targeting enterprise customers directly, exploring multi pronged sales models, and innovating with category creation

3. Growing domestic market: Till now, domestic clientele usually served as a fertile product testing ground for early SaaS adopters with limited opportunity for ACV expansion. However, we are staring to see some green shoots with Indian businesses ready to part with larger wallet share for sophisticated business critical software. Over time, we believe there could be a world in which Indian SaaS companies could build venture scale outcomes with a majority of sales based in India

How have companies made the most?

Amid all the Covid fuelled digital action, the Indian SaaS ecosystem found itself in the perfect storm. Competitive advantages including deep domain expertise, strong customer resonance, and unmatched cost-effectiveness were amplified. Physical proximity, the achilles heel for remote sales has become a non-issue for global businesses, and the flood gates opened.

While it’s always hard to be prescriptive about what attributes to growth and ACV expansion, here are a few factors we think has helped move the needle on growing those accounts?

1. Product Simplicity

Develop user-friendly, collaboration-focused DIY products tailored to distributed teams and remote work environments. These products should minimize implementation assistance while maximizing customer satisfaction and engagement.

Leading example: Slack exemplifies the power of simplicity. Its easy-to-use interface and integration capabilities have turned it into a go-to choice for businesses worldwide.

2. Quick ROI?

Craft solutions that deliver extensive ROI through revenue enhancement, cost reduction, or improved efficiency while targeting use cases that move the needle for businesses in this recessionary environment. Ensure these offerings drive adoption and business value across multiple industries, ultimately revolutionizing the way businesses operate.

Leading example: Salesforce offers businesses a comprehensive suite of tools to manage customer relationships, streamline processes, and drive sales, delivering exceptional ROI.

3. Market wedges & GTM Strategy

While global SMBs can offer high volumes and low price points, Indian SaaS founders have been making the transition to enterprise sales faster while still leveraging efficient digital marketing and inside sales to optimize reach and scalability. The quicker that CAC vs LTV balances out, the easier the climb

Leading example: Mailchimp’s freemium model centers its GTM on global small businesses with best in class upselling playbooks?

Crystal ball gazing: The Future?

There's a lot to be excited about in the world of tech.The biggest game changer since the explosion of the internet just entered the chat: Gen-AI

Our biggest take-away from all the AI hype is that algorithms, powered by the right data sets and learning modules can now replace redundant human effort. Open source Large Language Models (LLMs) coupled with proprietary data sets can drive vertical AI modules that solve even the most niche use cases with ease

Over time, we believe AI can help product-led approaches take a sizable chunk of work away from IT services-style engagements that leverage lower-cost human talent to build software solutions. This can be a game-changer for companies looking to streamline processes and reduce costs.

A few ideas on how this could play out

1. Productization of People: As AI advancements like co-pilots continue to evolve, IT services will become increasingly productized, leading to productivity boosts. In a sense, with the right inputs - AI can ‘productize people’ and, as a result, expand the universe of use cases that can be ‘productized’ with code - all in a way that is incredibly economical to execute. Imagine a bespoke service for every business need where human execution is infinitely scalable!

2. AI-Powered Services Wedges: Other use cases will always mandate human intervention and here too India has a deep advantage with its skilled IT services workforce. AI solutions tag teaming with a human services can generate value in areas like data tagging, model management and pre/post implementation support. All global competitors can compete on the AI compute angle, but the value added services is where a moat can be built

3. Data Enrichment: While AI solves for the compute problem, there is still immense potential in enhancing, querying, and extracting the right data sets from large data lakes. Educating an LLM with the right data will become a differentiator and Indian talent is well-positioned to solve these problems

4. Developer GTM: Developers will become more central to buying decision as more value accrues to AI and the technology powering the business. We anticipate more developer first GTM strategies in areas like governance, data scrubbing, model mapping/explainability and model documentation

The road ahead includes involves some exciting new vectors and it could be interesting to unlock new verticals and industries which have been the mainstay of the IT services crowd, albeit at a much more competitive price point. Ideally offering solutions at a fraction of the cost and a fraction of the time to completion will be a huge driver for product solutions in these sub-spaces

Seizing Opportunities?

And we believe there is much more to come from the Indian SaaS sector over the next few decades. Founders that can raise, deploy and experiment while keeping an eye on capital efficiency and sustained growth will see massive interest across the investor ecosystem. Building data repositories, value added services and strategic moats will be key and can help Founders build defensibility in a space where computing intelligence is increasing commoditized

At WaterBridge Ventures, we believe SaaS will become one of the largest sectors from India and an enduring theme for the next decade and more.

We’re looking for entrepreneurs who can think creatively about GTM models and build the next big export from India. If you are building something disruptive in this segment, please apply to our flagship accelerated seed program FastForward to secure up to $1mn funding within a 7 day application TAT

Application link: https://lnkd.in/gUzvS-mN?

To know more about Fast Forward: https://lnkd.in/g7Z2uHH3?