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February 4, 2014 07:00 pm GMT
So far, India’s over $100 billion IT industry has been built mostly on software services and back office projects delivered byTCS, Infosys and Wipro for the likes of Citibank and GE, who have been outsourcing non-core work to save costs over the last two decades. Now, the newly formed software product think-tank iSpirtsays software products can be a $100 billion industry in India by 2025, an ambition that may sound too bullish on the face of it, but not overly aggressive if you consider the progress of startups including InMobi, Zoho, Druva, FusionCharts, QuickHealand Eka Software. InMobi, for instance, has been growing its revenue by over 3-4 times every year, its founder Naveen Tewary told me. The startup’s ad network already has over 700 million users on its network –second only to Facebook. Currently, these companies report over $2 billion in annual revenues, according to Nasscom. iSpirt has released an interesting report today that covers some of the important details about the current state of India’s software product industry — where are the founders coming from, how are they building these startups, challenges in raising money, average valuation, etc. First of all, it’s tough to raise seed money for a product startup in India because many angels and VCs are still shying away from making such investments.The report also highlights the rise of SaaS startups such as Freshdesk that are looking to tap into markets potentially worth over $500 billion globally. But India’s software product startups face a massive challenge in terms of providing exits to investors. While these companies are around 2.5 years old on average, India offers very poor returns in terms of M&A exits, according to an iSpirt and Signal Hill analysis done last year. “In Israel the M&A exit value was 7X of the VC/PE investment during the same period. In US the multiple was 5X. In India it was only 1.1X (and this too was inflated because it counted IT Services M&A exits as well). “ With more senior industry executives quitting their cushy jobs to become entrepreneurs, and even angel investors, things have started changing for the Indian product ecosystem. There are over 3,000 small and mid-sized product startups in the country now, and it’s easier to get seed funding for a product idea today than what it was until few years ago. As pointed out earlier, Facebook’s acquisition of Little Eye Labs could
Original Link: http://feedproxy.google.com/~r/Techcrunch/~3/Tblsq25MKhA/
Can India Create A $100B Software Products Industry?
So far, India’s over $100 billion IT industry has been built mostly on software services and back office projects delivered byTCS, Infosys and Wipro for the likes of Citibank and GE, who have been outsourcing non-core work to save costs over the last two decades. Now, the newly formed software product think-tank iSpirtsays software products can be a $100 billion industry in India by 2025, an ambition that may sound too bullish on the face of it, but not overly aggressive if you consider the progress of startups including InMobi, Zoho, Druva, FusionCharts, QuickHealand Eka Software. InMobi, for instance, has been growing its revenue by over 3-4 times every year, its founder Naveen Tewary told me. The startup’s ad network already has over 700 million users on its network –second only to Facebook. Currently, these companies report over $2 billion in annual revenues, according to Nasscom. iSpirt has released an interesting report today that covers some of the important details about the current state of India’s software product industry — where are the founders coming from, how are they building these startups, challenges in raising money, average valuation, etc. First of all, it’s tough to raise seed money for a product startup in India because many angels and VCs are still shying away from making such investments.The report also highlights the rise of SaaS startups such as Freshdesk that are looking to tap into markets potentially worth over $500 billion globally. But India’s software product startups face a massive challenge in terms of providing exits to investors. While these companies are around 2.5 years old on average, India offers very poor returns in terms of M&A exits, according to an iSpirt and Signal Hill analysis done last year. “In Israel the M&A exit value was 7X of the VC/PE investment during the same period. In US the multiple was 5X. In India it was only 1.1X (and this too was inflated because it counted IT Services M&A exits as well). “ With more senior industry executives quitting their cushy jobs to become entrepreneurs, and even angel investors, things have started changing for the Indian product ecosystem. There are over 3,000 small and mid-sized product startups in the country now, and it’s easier to get seed funding for a product idea today than what it was until few years ago. As pointed out earlier, Facebook’s acquisition of Little Eye Labs couldOriginal Link: http://feedproxy.google.com/~r/Techcrunch/~3/Tblsq25MKhA/
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