‘India ka time aa gaya hai (India’s time has come),” exults Avinash Raghava, the 49-year-old SaaS entrepreneur who feels that founding volunteer at SaaSBOOMi, an India-based community of over 2500 engineers working around the SaaS (Software-as-a-Service) ecosystem and claims to be Asia’s largest community of SaaS founders and product builders.
“You will see many more Indian entrepreneurs building for the globe. Many would work for the Indian market but if you have the knowhow, you will build for any market.”
Last month, Raghava, also a co-founder of iSPIRT, hosted ‘The Rise of India SaaS – A SaaSBOOMi Initiative’, at Menlo Park, CA where more than 50 startups and venture capitalists (VCs) from both India and the United States attended.
In an exclusive interview with indica, Raghava spoke about the successes, the challenges and trials and tribulations of being a tech entrepreneur in Silicon Valley or elsewhere in the U.S.
“In six to eight years, we will have more category creators, and these companies will provide tough competition to their American peers,” Raghava said, giving examples of Freshworks (founded in Chennai, India and headquartered in San Mateo, CA) and Postman [founded in Bengaluru, India with an American arm in San Francisco, CA).
“While we will be known as a nation of software services, we will soon start hearing about the India that can code and build a product for others. The time has come for Indian companies to build a world-class product,” Raghava said. “There are so many Indian tech entrepreneurs in Silicon Valley.”
Founded in 2015, SaaSBoomi is a volunteer-based community of SaaS firm founders. While founders are spread across the world and help in developing the community, there are core volunteers like Raghava who put in greater effort for the community to thrive. “I am passionate about helping entrepreneurs,” Raghava said.
Most SaaS founders between 25 to 45 years old, Raghava said, and close to half of them are from the prestigious IIT schools. Many, he said, are from tier 2 and tier 3 towns in India where the entrepreneurial drive is immense.
Several Indian-origin American SaaS companies such as Freshworks, Druva, Zomato and CleverTap are proving that the second generation of entrepreneurs is making its way in the U.S. “The founders of Infosys and several other IT services companies did not move to the United States. Infosys, Wipro and Cognizant all had a country lead in America, but the founders were based in India.”
The first generation of entrepreneurs here were mostly America-based. People such as Vinod Khosla or Sabeer Bhatia built products in the U.S. and set up offices in India, but continued to work here. “Now we seeing people from India moving to the U.S. and setting up businesses here.”
Raghava said that according to a McKinsey report, by 2030, the SaaS ecosystem will be capable a value of over $1 trillion-dollar value and generate half a million jobs. “This rivals what the overall tech sector achieved in 30 years SaaS is poised to achieve it in 10 to 15 years.”
The data seems to back what Raghava claims. In the last five years alone, VCs have invested $4 billion in Indian SaaS companies. Indian pure-play SaaS firms have generated $2.6 billion in revenue and employed over 40,000 people.
Raghava said that it is a myth that Indian software companies were not building products. “Indian companies have been deeply involved in offshore product development. A company like Microsoft would specify its needs to Pune-based Persistent Systems, which would build it for Microsoft. In the last few years, we learned what it takes to build a product and then identify the market. We are still not good in marketing or storytelling, but we have begun building great products. Once we have the product, the next step is to grow the market around it.”
He said the younger generation is far savvier today than the previous set of entrepreneurs. “This is why we have been able to build 100 unicorns in the last decade, with around 20 of them in the SaaS space.”
He added, “Earlier people were not willing to buy an Indian product. Not anymore. Many of these companies have done so well that you can’t really distinguish whether the company is from India or the U.S. Indian firms are creating truly global products with great quality and brand value.”
Most Indian product-side companies have developed the expertise, and the market is broadening, Raghava said. “Earlier, SaaS firms used to build software, look for customers, go to the client site to install the software and they would run the network from there. Now, the cloud has disrupted this model. You don’t need a big team to implement and support. Then there are the investors. Of course, we cannot ignore the start-up struggles.”
He said, “In Silicon Valley, we are not as well connected as we should be. When a start-up is founded, they struggle with market access. They know how to build a product, but access remains a concern. Since the Indian-origin entrepreneurs have not lived here in the U.S., they need help. Two decades ago, we had The Indus Entrepreneurs (TiE). There was one umbrella.”
Raghava feels that established Indian entrepreneurs should build something that will make newcomers feel belonged. “When you move here, you don’t even know where to stay. We have to work on that, and we are positive we will be able to resolve that. I feel it would a big thing for us.”
At the same time, he said, it’s hard for SaaS companies to do business in India. “Which is why 80-90% of companies are Incorporated in Delaware, Singapore or Ireland. The wealth created by Indian entrepreneurs is going to different countries because the government really doesn’t know how SaaS businesses work.”
He said if a company gets acquired, the transaction gets stuck at the Reserve Bank of India level for up to 18 months. “The person can’t even start the next thing. Freshworks had to list in the U.S. I think the Indian government did not understand the needs of the new generation of IT entrepreneurs.” He said the Indian government supported the sector in the 1990s by giving tax exemptions to IT services companies. That is how the industry took off.”
Raghava said the new wave of SaaS companies did not benefit from government policy. “All these companies are setting up base in places like Dubai. We don’t have much hope,” Raghava said.