Big 30 software startups see valuations climb 26%: iSPIRT.
By Anirban Sen, ET Bureau | 5 Feb, 2016, 02.38 PM IST.
Valuations of India’s top 30 software products startups jumped by at least 26% in 2015, while the pace of mergers and acquisitions more than doubled from last year, according to software products think-tank iSPIRT.
The three-year old grouping, formed to foster the cause of software product development in the country is also helping to draft a National Policy on Software Products.
“It represents a new paradigm of policy making,” said Sharad Sharma, a founding member of iSPIRT with cofounders Naveen Tewari, Bharat Goenka, Jay Pullur and Vishnu Dusad, in an annual letter charting the progress of iSPIRT, shared exclusively with ET. The policy, which will offer no sops, aims to take an integrative view of changes needed to create an enabling environment for startup activity.
“The big challenge now is whether one of the companies in the software product space can become big enough to create an ecosystem around it,” said Sharma, adding that iSPIRT would work towards increasing the pace of M&A activity in 2016.
For decades, India’s software product firms have been overshadowed by the software outsourcing sector dominated by homegrown giants such as TCS and Infosys.
But a new generation of software products startups led by the likes of Zoho, In-Mobi, Freshdesk and IBS Software are beginning to change that perception. According to Nasscom, revenues from the software products industry is expected to touch $10 billion by 2020 — a more than five-fold increase from $2 billion during 2012-13.
Vijay Shekhar Sharma, founder of Paytm is of the view that iSPIRT has done a lot of good work to kick-start the software products movement as well as “other issues such as net neutrality”.
In 2014, iSPIRT had launched an index called “iSPIxB2B” to track the progress of software product startups every six months on metrics like valuation (post money), employees, funding and key target markets.
According to this index, the valuations of India’s top 30 software product startups has increased to well over $10 billion, from $6.2 billion in 2014.
However, the number of startups leaving the country to re-domicile outside India has increased to 75% from 51% a year ago, an issue that the grouping has highlighted through representations to the government on policy changes required to stem this exodus.
“(iSPIRT) is a very grassroots, volunteer-driven group, which has done a lot of good work on the evangelism side. It’s like we’re in an orchestra, with everybody (TiE, Nasscom, CII) playing a different instrument for the ecosystem. We hope to make good music at the end of the day,” said serial entrepreneur Ravi Gururaj, who also chairs the Nasscom Product Council.
(Additional reporting by Krithika Krishnamurthy)