A session at SaaSBOOMi Annual 23

1. March 2023
SaaSBOOMi Annual 2023
Shaping India's
SaaS Landscape
Over the Next
Decade

2. 2
Disclaimer
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without the prior written consent of SaaSBOOMi
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accuracy or completeness of the information presented nor the figures or calculations arising from
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information / content available on this page / in this presentation

3. 3
Introductions
Tarek Elmasry
Senior Partner,
Global Co-Head of TMT practice
Manav Garg
CEO & Founder, Eka
Noshir Kaka
Senior Partner,
Global Co-Head of TMT practice
Ritesh Arora
CEO & Founder, BrowserStack
Girish Mathrubootham
CEO & Founder, Freshworks

4. 4
Acknowledgements Special thanks
SaaSBOOMi Report Steering Committee SaaSBOOMi Community
And to 50+ Indian SaaS founders/ CEOs who participated in
the SaaSRadar benchmarking survey as part of this effort
Sangeeta Gupta
NASSCOM
Girish
Mathrubootham
Freshdesk
Shekhar Kirani
Accel
Krish Subramanian
Chargebee
Tejeshwi
Sharma
Sequoia
Manav Garg
SaaSBOOMi
Ritesh Arora
Browserstack
Supported by
SaaS founders
Investors
Avinash Raghava
SaaSBOOMi
Knowledge Partner

5. 5
Shaping India’s SaaS landscape
7 SaaS an important component of India’s
economy by 2030 – will create 500K+ jobs, drive
$0.5T+ value, 100+ unicorns
Concerted action required in 10 key areas by industry,
government, investors and corporates
6 War for talent will continue, large demand-
supply gap (900K+ open positions, 15%+ growth)
How to hire right and whom to hire to become critical to
scale
5 India continues to have sustained structural
advantage on talent, cost and expertise. However,
only few India SaaS players leveraging India
advantage to fullest
Pivot to an institutionalized execution mindset (predictive
metrics, operational playbooks, tooling & telemetry) across 6
“Gears of Growth” – Business model, Talent, GTM,
Productivity, Business building and M&A / Partnerships
Trends Implication for India SaaS
1 Long term SaaS opportunity continues to be significant,
India SaaS on track to achieve $50-70 B aspiration by 2030
Global and India SaaS has exceeded growth
expectations by 1.5x ($420B global opportunity
with India at $7B)
2 Near-term demand environment likely to be
tough (60% CIOs likely to reduce new software
spend)
Where to compete matters more than ever – differentiate
basis disruptions in established segments or target 100+
emerging domains
4 3 distinct speed bumps: $10M, $25M and
$100M observed while scaling up SaaS
India SaaS can emulate outperformers & India leaders by
selecting the right business model across 7 axes and
driving robust execution
3 Tightening of US economy with 4x increase in
US fed rates in last 12 months
Efficient growth new mantra – need to play both “offence”
and “defence”

6. 6
1: Global SaaS has exceeded growth expectations, reaching $420 B
opportunity in 2022
Source: Gartner - Enterprise IT Spending by Vertical 4Q 2022, IDC Worldwide Public Cloud Services Spending 2022, IDC Semiannual Software Tracker 2022H1, McKinsey CIO Survey 2022
2020 2030E
2022
~220
~420
1300-1600
+38% p.a.
15-18 p.a.
35% 52% ~85%
2020-22 CAGR: 38% (actual)
v/s 2020 estimates of 17-24%
SaaS penetration in software
Global SaaS revenues, $ B

7. 7
12%
Telecom
14%
Software 25%
IT Services
Hardware
49%
1: Software and SaaS continue to outperform other tech segments
in value creation
Source: Gartner - Enterprise IT Spending by Vertical 4Q 2022, IDC Worldwide Public Cloud Services Spending 2022, Capital IQ, McKinsey Corporate Performance Analytics
Enterprise tech spend by segments 2022, % Enterprise value by segments 2022, %
48%
37%
10%
5%
On-Prem
48%
EV/
Revenue
multiple,
Q4 FY22
NTM
2.4
6.2
2.5
1.1
SaaS
52%
SaaS
>60%
On-Prem
<40%

8. 8
1: India SaaS ecosystem on track to achieve its $50-70 B aspiration
by 2030
India SaaS revenues, $ B India SaaS – Number of companies by revenue band
Sources: IDC Worldwide Public Cloud Spending 2022, IDC Semiannual Public Cloud Tracker 2022H1, SaaSBOOMi data, CXO interviews, Pitchbook, Annual Reports, ROC filings, Press search
~2 2-4
Global market share, %
~1 4-6
50-70
15-21
~2.6
2020 2030E
2022 2025E
7
25-30%
30-35%
56%
xx
2020 2022
SaaS unicorns 10 19
SaaS centaurs 15
5
$1 - 5 B
$500 M- 1 B
$100 - 500 M
$50 -100 M
$10 - 50 M
$5 - 10 M
>$5 B
4
4
1
-
-
~30
~50
~1000
<$5 M
13
13
1
1
-
>50
~250
2,300-2,800

9. 9
1: Tightening of US economy is accelerating push to “Efficient
Growth”
US Fed Fund Rate % Efficient growth is the new mantra
11.7
5.0
2020 2022
-57%
Median
SaaS Median EV/LTM multiples
4.3%
18
2008 22
10 12 16
14 20
4%
0%
2024
1%
2%
3%
5%
4x increase in
interest rates
Source: US Bureau of Labor Statistics, S&P Dow Jones Index, BVP, Public Comps, Pitchbook, McKinsey Software CEO Survey 2023, CapitalIQ, McKinsey Analysis,
1. Mean values from 2008 to Jan 2023
10.8 8.4
30.2
8.4
2020 2022
2.8x
1.0x
High profitability companies (>30% EBITDA margin)
High growth companies (>40% CAGR)

10. 10
1: Tough demand conditions expected in near term
40-55%
Defence
Productivity
improvement via
hyper-automation
~70%
expect economic
slow-down over
next 18 months
~80%
plan ~15%
reduction in
discretionary spend
20-25% Revenue through
new offerings
Offence
Key to resiliency
~60%
likely to reduce
new spends on
software
Source: US Bureau of Labor Statistics, S&P Dow Jones Index, BVP, Public Comps, Pitchbook, McKinsey Software CEO Survey 2023, Capital IQ, Analysis Mason, McKinsey analysis
What we heard from CIOs

11. 11
1: Where to compete matters more than ever
Source: Gartner - Enterprise IT Spending by Vertical 4Q 2022, IDC Worldwide Public Cloud Spending Guide and Tracker 2022, IDC Semiannual Software Tracker 2022H1, McKinsey analysis
Segment
Size:
$125 B,
21% CAGR
Dev Tools
Size: $85
B, 17%
CAGR
Vertical
Size:
$210 B,
18% CAGR
Horizontal
Disruptions
Leverage disruptions in
established segments
Middleware
Infrastructure
BI / Visualization
Cloud, API-
fication, Multi-
device support,
Open source
BFSI Cloud in CBS
Telecom
On-the-fly
provisioning in
OSS / BSS
Retail AI in Store Ops
ERP + HCM
CRM
Service Desk
Omni-channel,
integration with
ecosystems,
Conversational AI,
Need for simplicity
Established Emerging
Target 100+ emerging hotspots
Vulnerability
management
Cyber-Security OT security Application security
Dev Ops Low code no code Observability
DevOps Build, Test,
Release
Data and
Analytics
Cloud data warehouse ML and Data Ops
Data integration and
governance
BFSI
eKYC, AML and
fraud management
P2P/SME lending
and underwriting
Open banking and 3P
integrators
Healthcare
Remote monitoring and
diagnostics
Clinical trial
acceleration
AI-enabled drug
discovery
Retail
Logistics and last
mile distribution
D2C enablement
GenAI orchestration
and tuning platforms
Applied AI Video creation/editing
3D object gen and
product design
EHGRC 3P Risk Management
Corp. governance
and compliance mgmt.
Domains
Illustrative

12. 12
1: GenAI to create net new opportunities for SaaS players
High
Low
Level of disruption
Industries
Healthcare
Media and
Entertainment
Life Sciences and
Agriculture
Manufacturing
Public Sector
Total Level of
Disruption
Technology and
Telecom
Total
Level of
Disruption
Marketing and
Sales
Functions
Creating and
editing unique
content, e.g.,
short clips
from longer
videos,
images
Banking and Insurance
Consumer Goods and
Retail
Education
Energy and
Environmental
Metals and Mining
Transport, Logistics,
and Travel
Product Dev./
R&D/ Engineering
Rapid idea gen.
for new content
and VFX, e.g.,
video games;
music; movie
storylines; news
articles
Operations:
Supply
Chain IT
Risk and
Legal
Talent
and Org
Strategy
and
Finance
Source: McKinsey analysis
Early Adoption
Virtual
assistants to
recognize
medical
language in
real-time,
provide
explanation
to patient
for
more
effective
comms
Operations:
Customer
Service

13. 13
2: Three “speed bumps” SaaS companies encounter as they scale
% of SaaS companies reaching each lifecycle stage in 2021 vs. starting revenue in 2017
Revenue
2021
Outperformer Speed Bump
Revenue 2017
67%
87%
91%
13%
88%
77%
8%
53%
6%
250-500
100-250
50-100
25-50
10-25
>500
<10
10-25 25-50 50-100 100-250
<10 250-500
33%
14%
32%
9%
15%
6%
1%
$ M
Source: IDC Public Cloud Services Tracker Vendor 2022 SaaS Revenue, Public Comps, Capital IQ, CXO interviews, McKinsey analysis

14. 14
3: Examples of successful business models in India across SaaS
segments
Horizontal SaaS
CIO @ SMB, Departments
or teams in Mid market
Inbound sales / VARs /
Partners
Highly responsive for
segment
Full-fledged product suite
Best-in-class for ICP
Large (>$5 B)
Established (e.g., CRM,
Service Desk) riding
disruptions (multi-channel)
Dev Tools
Developers
PLG
Highly responsive for
segment
Best of breed
Market competitive
Medium ($2-5 B)
New category (e.g.,
API management,
Software quality)
Source: Expert interviews, Analyst reports, Company annual reports, Company websites, McKinsey analysis
ICP
How you serve/
channel
Customer Service
Product offering
TCO for customer
Targeted
value
proposition
Differentiated
GTM for ICP
Size of
opportunity
Where to
compete
Attractive
hotspots
Vertical SaaS
CXO at Enterprises or Mid
market
Field sales
Highly responsive for
segment
Best of breed
Market competitive
Medium ($2-5 B),
Large (>$5 B)
Vertical niche in mature
segment (e.g., healthcare
data platform)

15. 15
3: India continues to have a sustained structural advantage
Clean sheet
improvement potential
15-20%
Lower S&M investment
15-20%
Better payback periods
30-40%
Lower R&D intensity
India
structural
advantage
TCO
advantage
>20%
Lower TCO
(software + services +
support) proposition
World
class
talent
>1.9 M
Digitally-skilled
tech talent
Captive
market for
DevTools
>80%
“Run the business”
support services
delivered from India
Highly
responsive
customer
success
and support
5.4 M
Software developers
(~1.3x of the US)
Vertical/
functional
domain
knowledge
55-60%
Global business processes/ workflows
are managed in India
Source: LinkedIn Sales Navigator, Company annual reports, NASSCOM, Glassdoor, Press search, McKinsey analysis

16. 16
3: Therefore, India SaaS ecosystem has potential to rival global
peers
Indian SaaS
Leaders (>$50 M)
Global SaaS players
Top quartile (<$25 M)
Indian SaaS players
Median (<$25 M)
15-30% 30-50%
50-60%
Rule of 40 %
25-50% 35-45%
80-90%
Overall growth %
80-100% 100-120%
115-125%
Growth from
current customers
Net Dollar Retention
20-40% 30-40%
50-70%
GTM investment
Sales and Marketing as
a % of revenue
-25 to 0% -10 to 5%
-30 to -20%
FCF %
Source: SaaSRadar, SaaSBoomi 2022 survey, Public Comps, BVP, RoC filings, Expert interviews, CXO interviews, McKinsey analysis
55-65% 75-85%
75-80%
Gross margin %

17. 17
3: Global and India outperformers have navigated “speed bumps”
through 6 gears of growth
Programmatic
New Business
Building
5
M&A and
Partnerships
Talent
2
Productivity
4
Business Model
1
Efficient
GTM
3
6
Source: McKinsey analysis

18. 18
3: Key imperatives for the India SaaS ecosystem
Source: McKinsey analysis
<$10 M ARR $10-50 M ARR
 Complement founder skillset with experienced
veterans in product / sales
 Build unique company culture
 Build functional leadership team – professional CRO and regional
sales org, full-time CFO and product heads for major product lines
 Set-up hiring pipelines and processes
 Pick differentiated “where to play”
 Identify and focus on 2-3 ICPs (e.g., CFOs of
Mid market in Western Europe companies to
reduce finance spend by 15%)
 Expand ICP by expanding buying centers (e.g., CFO to COO) and
segments (e.g., SMB to Mid market)
 Evolve product via new revenue streams (e.g., B2B2C / FinTech)
 Create ROI-based value creation pitch to drive
30%+ higher win rates
 Discover and develop primary GTM channel
(generating >60% of all leads)
 New channels: e.g., partnerships / marketplaces to drive ~30%
higher lead-gen
 Price to Value: migrate from seat-based to usage-based pricing
driving 10-20% higher ACVs
 Mature GTM: dedicated customer success, account management
and product specialists / solutioning
 Drive 30-50% improvement in S&M and developer velocity via
GenAI and rigorous performance management
 Automation-led approach to reduce 30-40% of services intensity
 Launch "Act 2" products in adjacencies for 20-25% new revenue
 Ensure integration among different “acts”
 Selective M&A to plug product gaps / Act 2 (~5% in-organic
growth)
 Develop 2-3 key implementation and GTM partners
Gears of growth
Talent
2
Business Model
1
Efficient GTM
3
Productivity
4
New Business
Building
5
M&A and
partnerships
6

19. 19
Time to hire
ARR growth, NRR,
Win rate, ACV
Product features /
use-cases
ICP
Hire right
Lead gen &
conversion
Pricing & packaging
Churn
<$10M ARR
3: Pivoting from “Hustle” to “Institutionalized” execution
Gears
Elements
Productivity
(R&D & services)
Governance
New Business
Building
Business
Model
M&A and
Partnerships
Talent Efficient GTM
Data
People
Metrics
Systems
Practices
Source: McKinsey analysis
<$25M ARR
>$25M ARR

20. 20
4: Global talent pressure continues, driven by sustained wage
inflation and low unemployment levels
23
2020 21 22 2024
100%
110%
100% 102%
109%
106%
119%
128%
113%
139%
2024
22
2020 21 23
8%
10%
5%
8%
4%
7%
4%
7%
4%
7%
Tech talent wage inflation in USA and India
2020-24E
Unemployment in USA and India
2020-24E
Source: Statista, Inflation.eu, U.S. Bureau of Labor Statistics, McKinsey analysis,
Forward estimate
India
India
US
US

21. 21
4: Demand-supply gap for SaaS talent continues – hiring best-fit
candidates is the need of the hour
64
234
52
231
73
128
18
13
17
13
35
42
Hiring growth
LTM, %
Sales
Engineering
Product
Open positions
Mar 2023, ‘000
Key roles
Product Management
Product Marketing
Account Management
Customer Success
Full stack development
AI / Data and Analytics
Who to Hire:
Talk to industry role
models, balance
generalists vs.
specialists, evaluate
cultural fit
How to Hire:
Referrals via networks
best quality channel
Source: LinkedIn Talent Insights Mar-2023, McKinsey analysis
900K+
Open positions
15%+
Growth in key SaaS skills

22. 22
Shaping India’s SaaS landscape
7 SaaS an important component of India’s
economy by 2030 – will create 500K+ jobs, drive
$0.5T+ value, 100+ unicorns
Concerted action required in 10 key areas by industry,
government, investors and corporates
6 War for talent will continue, large demand-
supply gap (900K+ open positions, 15%+ growth)
How to hire right and whom to hire to become critical to
scale
5 India continues to have sustained structural
advantage on talent, cost and expertise. However,
only few India SaaS players leveraging India
advantage to fullest
Pivot to an institutionalized execution mindset (predictive
metrics, operational playbooks, tooling & telemetry) across 6
“Gears of Growth” – Business model, Talent, GTM,
Productivity, Business building and M&A / Partnerships
Trends Implication for India SaaS
1 Long term SaaS opportunity continues to be significant,
India SaaS on track to achieve $50-70 B aspiration by 2030
Global and India SaaS has exceeded growth
expectations by 1.5x ($420B global opportunity
with India at $7B)
2 Near-term demand environment likely to be
tough (60% CIOs likely to reduce new software
spend)
Where to compete matters more than ever – differentiate
basis disruptions in established segments or target 100+
emerging domains
4 3 distinct speed bumps: $10M, $25M and
$100M observed while scaling up SaaS
India SaaS can emulate outperformers & India leaders by
selecting the right business model across 7 axes and
driving robust execution
3 Tightening of US economy with 4x increase in
US fed rates in last 12 months
Efficient growth new mantra – need to play both “offence”
and “defence”

23. 23
5: Success will require concerted support across the ecosystem
Source: Expert interviews, McKinsey analysis
Industry Associations
Support new SaaS startups with
operational metrics / benchmarks
and best practice playbooks (incl.
financial risk management)
Drive large-scale skilling programs
and certifications for key SaaS roles
Create a global network, develop
playbook to facilitate hiring of best-fit
executives
1
2
3
Paint a clear and consistent picture
of “what great looks like” and help
SaaS players navigate through the
near-term fund crunch and extend
current runway
Mentor SaaS start-ups on “where to
compete” and help mid-stage SaaS
companies build operational
instrumentation
Investors
7
8
Government
Promote ease of listing SaaS
business in India and offer
conducive regulatory environment for
investments and exits
Support skilling initiatives by
providing access to educational
infrastructure
Open-source and build ecosystem
for SaaS players to leverage the
“India stack”
4
5
6
Corporates
Partner with SaaS start-ups to co-
develop global products
Build own bench of software talent
through organic means or
acquisitions
9
10
Aspiration for 2030
100+
Unicorns
50+
Centaurs
500k+
Jobs
$50-70 B
Revenues
$0.5+ T
Value and IP creation

24. 24
Launching SaaSBoomi Annual 2023 Operational playbooks
What you get
SaaSBoomi
Operational
metric
benchmarking
SaaSBoomi
Operational
practice
playbook
How to request
Benchmarking areas
 Overall SaaS Financials
 Revenue / GTM engine
 Product engine efficiency
 New business building
Scope
 Global & Indian peers for relevant
customer segment & ARR scale
Key areas
 Industrialized execution framework
 What “gold” looks like – metrics &
practices
 Key questions & growth hacks
Scope
 Differentiated business model
 Talent
 Efficient GTM
 Productivity
 New business building
Playbook
Available via SaaSBoomi
Link & QR Code :
https://www.surveys.online/jfe/form/
SV_bpXn1G8RG2AkWc6

25. 25

26. 26
26
Backup

27. 27
2: Global outperformers – Success stories to emulate
Source: Analyst reports, Company annual reports, Company websites, Press
Differentiated business model and
PMF approach
 First “data lakehouse” provider
 “The Netflix contest”, “Sorting contest” –
global benchmarks in AI and data
processing to establish PMF
Open-source to Enterprise GTM pivot
 Apache Spark (Open source) and
Berkely community for adoption pivot to
field sales to CDOs
Complementary talent
 PhD founders balanced with SaaS
industry veterans for scaling up
Programmatic M&A
 4 acquisitions since 2020 to expand
capabilities
ARR: $1 B
Growth: 70%
Rule of 40: 60%
Focused ICP, feature discovery and
innovation
 “Project management and collaboration
tool that replaces email” vision,
purposefully avoided comms (e.g.,
Zoom)
 Dedicated user research team for
feature discovery
Middle road between Freemium and
Enterprise GTM
 Freemium self-serve model to
generate initial trials and adoption
 Pivot to KAM model and aggressive
account mining for large accounts
(145% NRR)
Agile product pivots
 Quick, grounds-up pivots to learn from
competitors like Slack/Teams
ARR: $379 M
Growth: 67%
Rule of 40: 44%
Deep differentiation, but strong focus
 Sole focus on cloud data, innovation on
segregation of storage and compute in
multi-cloud model
Razor-sharp focus on industry-leading
NRR (178%)
 “Land and expand” strategy with
aggressive account mining
 Consumption-based pricing – pricing
basis utilization of compute and storage
separately
 Act 2: Data marketplace (>40% growth),
Snowpark platform and Industry data
clouds (FS, Media)
Partner-led growth strategy
 100+ partners to access CXO buyers
and drive large deals
ARR: $2.2 B
Growth: 67%
Rule of 40: 86%