The total valuation of India’s top 30 enterprise software product companies is touching $10.25 billion, pushing up the value of an index compiled by software products think tank iSpirt by 20 per cent. “We see a steady growth in this space and we expect it to continue to grow nicely. The data tells us that the ecosystem is accelerating,” said Dev Khare, managing director at Lightspeed India Partners Advisors, who helped put together the report for iSpirt. The report, based on an index called iSPIxB2B comprising top 30 software product companies in India and their valuations, said that the number of employees at these companies have also grown by nearly 18 per cent to over 21,200 employees.
“There has been a notable increase in the enterprise value per employee, showcasing shift from services heavy to product-heavy offerings,” said the report. Khare said the growth in the number of enterprise software companies is due to three key reasons—the growing domestic market, easier access to global customers via the internet and a growing breed of entrepreneurs who have deeper understanding of software products and industries.
“There is a new class of entrepreneurs coming in with a very close finger on the pulse of the needs today and creating solutions for that,” said Khare. An overwhelming majority of the companies (80 per cent) including the likes of cloud telephony company Knowlarity, customer support software maker Freshdesk and ad tech company InMobi are focused on the global market while the rest are looking to tap into the Indian market.
About 67 per cent of the companies are domiciled in India but since 2009, majority of Indian B2B companies have started incorporating in the US and Singapore, the report noted. “The government is trying to introduce policies which makes it more conducive for companies to remain domiciled in India,” said Khare. In June, India’s market regulator Sebi said it will launch an alternative trading platform for internet startups with relaxed norms for listing.
Most of the companies in the index have bootstrapped themselves without institutional financing in the early stage. Nearly 43 per cent are bootstrapped and most institutionally-funded companies got growth financing, rather than early-stage venture capital financing, said the report.
Companies from Delhi dominate the index followed by Bengaluru, Chennai, Pune, Mumbai and other cities. Nearly 40 per cent of the companies in the index sell products across different enterprises but the rest are focussed on financial services, retail, media and travel, the report said.