SaaS Startups: Nearly 92% of Indian SaaS companies adopted AI within 12 months, says Bessemer

Nearly 92% of software-as-a-service (SaaS) startups in India have integrated some form of artificial intelligence (AI) features into their products over the past 12 months, and nearly 87% of these companies describe themselves as AI-native SaaS or AI-enabled SaaS, according to a report by a venture capital firm. Bessemer Venture Partners.

This integration of AI Technologies Incorporating technologies such as machine learning (ML), natural language processing (NLP), and advanced analytics into SaaS platforms helps make software more intuitive, adaptable, and capable of automating complex tasks.

“We hope that SaaS Market “The Indian SaaS industry is in the midst of a transition towards what we call IndAI SaaS,” Anant Vidur Puri, partner at Bessemer Venture Partners, told ET.

The report, titled ‘The Rise of SaaS in India 2024’, surveyed around 100 SaaS Startups with annual recurring revenue (ARR) ranging from $3 million to $200 million, Puri said.

Read also | Indian SaaS in the midst of a big reset in the funding winter

In addition, the report predicts that Indian SaaS Centaurs and unicorns are expected to generate $20-25 billion in revenue by 2030. Indian pioneers such as Perfios, Bill Desk, and Razorpay are expected to reach $5 billion in annual recurring revenue by 2023, while global pioneers such as Zoho, Amagi, and Icertis are expected to reach approximately $17 billion in annual recurring revenue over the same period. Collectively, these unicorns and centaurs accounted for $5.9 billion in revenue during 2023 alone.

In 2024, India saw two new SaaS Unicorns: perfios and KrutrimCentaurs are defined as startups with valuations of more than $100 million, while unicorns are those valued at more than $1 billion.

The report also noted that between 2022 and 2023, more than 100 companies achieved revenues between $1 million and $5 million, and nearly 40 companies between $5 million and $10 million.

“This data indicates that software adoption in the ecosystem is increasing and more people are willing to trust smaller companies to come and implement in their environment,” Puri added.

Additionally, total investment in Indian SaaS startups this year is on track to surpass 2023 levels. Companies in the sector have raised $0.53 billion in H1 2024, compared to $0.9 billion in 2023, the report said.

“AI has been an undeniable catalyst for Indian SaaS. It has accelerated our ability to move quickly and decisively in the market. Indian entrepreneurs are combining the strengths of their products with complementary services to deliver capital-saving outcomes. At Everstage, we are incredibly excited about the potential of AI and are rolling out new modules with this technology at the core,” said Siva Rajamani, co-founder and CEO of SaaS startup Everstage in the report.

Read also | SaaS star Postman sees 30-40% valuation cut in secondary deal

Cybersecurity takes center stage

As Indian SaaS companies increasingly adopt AI in their operations, the risk of cybersecurity threats Domestic consumption of cyber software and services increased from $3.4 billion in 2021 to $6 billion in 2023, according to the report.

Furthermore, the number of cybersecurity professionals in India has more than tripled in the last three years to around 300,000. Most companies plan to increase their cybersecurity budgets by 6-15% in the next 12 months, which will further boost market growth.

“At Perfios, cybersecurity is an integral part of our vision to transform financial data management. By implementing state-of-the-art security measures, we ensure the integrity and confidentiality of our clients’ data,” said Sumit Nigam, CTO of Perfios in the report.

Bessemer Venture Partners has been investing in India since 2006. Its global portfolio includes companies such as Pinterest, Shopify, and LinkedIn. In India, Bessemer is one of the early investors in companies such as MediAssist, Swiggy, Urban Company, Bigbasket, Perfios, Livspace, Pharmeasy, and The Good Glamm Group.