SaaS startups chart own path

Taking Business In Own Stride

- Founders of SaaS startups feel patent protection at stake

- Replication of their products

- Startups fear of losing their identity

- India, 3rd largest SaaS ecosystem globally, after USA and China

- No. unicorns in SaaS space reached to 13 from just one in 2018

We don't want to give our solutions as a white-label product to any IT services companies for serving their clients. Of course, we get those kind of offers, but it will not be wise to collaborate with an IT firm without proper patent and branding of our products, said a founder of a SaaS firm operating in mobility space

Bengaluru: Young SaaS (software as a service) companies are not keen to collaborate with the IT services firms in providing solutions to clients despite the quick revenue earning potential of tapping this route. Rather, most of these new age SaaS companies want to attain certain scale with proper branding of their products before relying on this revenue model.

"We don't want to give our solutions as a white-label product to any IT services companies for serving their clients. Of course, we get those kind of offers, but it will not be wise to collaborate with an IT firm without proper patent and branding of our products," said a founder of a SaaS firm operating in mobility space. "It is easier way to earn revenue through this route. But branding of our own product will suffer. Also, without proper patent protection, our product can be replicated," said the founder.

Usually, IT services companies collaborate with other service providers in case that particular solution is not available with them. As an integrated service provider, IT firms usually tie up with SaaS firms depending on the specific solution required.

However, small SaaS startups fear that as there is a fear of losing their identity. "There are also instances that wherein service providers have developed their own solutions, similar to that of a partner after using their platform. So, without patent protection, things become tricky," said another seed stage SaaS company operating in hospitality space.

Of late, India has seen rising growth of SaaS companies in recent years. The number of unicorns in the SaaS space has now reached 13 from just one in 2018. Currently, the country has the third largest SaaS ecosystem globally, after USA and China. Indian SaaS companies are poised to reach $30 billion in revenue, capturing 8 to 9 per cent share of the global SaaS market by 2025, according to a new report by Bain & Company.

The report said that investments in the space increased by 170 per cent over 2020 and are expected to reach $4.5 billion in 2021.

"While the overall growth in funding has been driven by an increase in deal volume across stages, there has been notable growth in the volume of deals larger than $50 million, as investors give a clear vote of confidence in the potential of Indian SaaS companies to achieve substantial future growth," the report had said.