india b2b software products industry clocks solid growth from 2014 to 2015

Contact the iSPIx team at [email protected] with any questions, comments or suggestions for other companies to consider for the next edition of the index

Indian Software Product Industry Roundtable – www.ispirt.in

Value of Top 30 Indian B2B Software Product Companies is $10 billion. Index is up 20% in USD terms.

Second Edition, June 30, 2015

(Online discussion at http://bit.ly/1LU0sKg )

(iSPIxB2B)

India Software Products Industry Index – B2B

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India Software Products Industry Index – B2B (iSPIxB2B)

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Executive Summary

Notwithstanding all the attention and growth in the consumer Internet segment in categories such as ecommerce and mobile, the B2B software product segment has continued to grow and thrive. We believe this segment of the technology market is well on its way to:

• deliver disruptive value to enterprise customers in India and around the world• grow beyond the tens of thousands of jobs to hundreds of thousands of jobs in India• drive a large amount of foreign exchange earnings for India• create billions of dollars of value for founders, employees and investors.

To drive a focused discussion, we have chosen to include companies that sell software to businesses on a license or subscription basis or where software drives a differentiated B2B service such as a B2B exchange or advertising network. The index includes business applications, media technology and infrastructure technology companies.

The Results

India’s B2B software product industry has grown nicely – the top 30 companies are valued at $10.25 billion (`65,500 crores) and employ over 21,000 people. The index has grown 20% in USD terms and 28% in INR terms 1from October 30, 2014 to June 30, 2015. Growth has been primarily driven by a third of the companies in the index growing their revenue or reaching large enough scale to start justifying global valuation metrics. Some key takeways:

• There has been an acceleration since 2010 in the pace of creation of B2B companies.• There has been a notable increase in enterprise value per employee, showcasing shift from

services-heavy to product-heavy offerings.• Vertically-focused offerings in retail, travel, financial services, media co-exist equally with

horizontal offerings targeting global markets.• There is a decreasing frequency of bootstrapping relative to VC financing to get to scale.• 50% of companies are in end-user applications with the remainder split evenly between media

technology and infrastructure/tools.• 80% of companies have global customer bases, while the rest are India-focused.• 67% of companies are domiciled in India, with the rest principally in Singapore and the US.• Bangalore and NCR account for half the companies’ principal city of operations in India with

Chennai and Pune as key secondary hubs.

1 There have been changes in the companies included in the index. Please note that the index tracks growth in aggregate market values for only those companies that are present in both the previous and current indices – refer to the section in the Appendix entitled “Index composition” for detail on the companies included and methodology used.


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While there was a change in the index from the first edition, many of the takeaways remain the same. We have outlined a few below.

Acceleration

The spread of companies in the top 30 based on when they were started is interesting to track. Clearly, companies created in the past decade are disproportionately highly represented in the index. Companies created since 2010 are even more disproportionately represented in the index – keep in mind that many of these have not been around long enough to realize their full potential yet.

This data shows the acceleration in the pace of creation of valuable B2B software product companies, perhaps coming through the ability to access global markets, availability of venture capital and a big acceleration in the use of technology by businesses globally. Over time, we expect companies in the list to be almost completely displaced by companies started since 2005. We expect the value of the top 30 Indian B2B software product companies to expand well beyond its current value of $10 billion (`64,000 crores) into the tens of billions as they participate in the $500 billion (`30,00,000 crores) global market for enterprise technologies. As discussed in the previous report, what is not in this index is a fairly large set of companies, many of which started in the 1990s and 2000s and have failed to scale meaningfully, whether because of lack of channels, lack of large customers in India or Global South-focused offerings with market size limitations.

We are clearly seeing the rise of more scalable B2B product companies. Companies started more recently are trading at higher market values per employee than companies started further back in the past. This is partly due to recently started companies having a far greater mix of product versus services and therefore growing faster and to a larger global market.

Takeaways


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Other ObservationsThere is a healthy mix of verticalized solutions versus horizontal solutions with about 40% of the companies being horizontal and the rest selling into verticals such as financial services, retail, media and travel.

43% are bootstrapped although most of the bootstrapped companies were started in the 1990s and 2000s and most of the institutionally-funded companies got growth financing, rather than early-stage venture capital financing.


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Just over 50% provide end-user business applications in segments such as CRM, trading, collaboration, business intelligence and banking. About 23% are advertising technology companies and the remaining 23% are providing enabling technology in infrastructure and tools, including segments such as security, identity management, developer tools and analytics.

Nearly 80% of the companies have global customer bases – the ones that have remained India-focused are exploiting large India-specific opportunities such as the large SME base, burgeoning ecommerce infrastructure needs, rapid growth of organized chains in retail, healthcare etc.


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About 67% of the companies are domiciled in India. However, this masks a significant shift since 2009 where many of Indian B2B software companies have started incorporating in the US and Singapore. There is some difference though in domicile versus city of principal operations which for all of the index companies is in India.

Index companies by domicile:• India (20): Accelya Kale, Browserstack, CRMnext, Eka, IBS, Indian Energy Exchange, Infrasoft,

Newgen, Nucleus, Ozone Media, Rategain, Ramco, Quick Heal, Suntec, SVG Media, Tally, Vserv, Vizury, Wingify, Wooqer

• USA (5): Druva, Freshdesk, Indix, Pubmatic, Zoho• Singapore (4): Adnear, Capillary, Inmobi, Knowlarity • UK (1): Kayako

A related stat is around the city of principal operations, which sometimes also serves as headquarters. The National Capital Region (NCR), consisting of New Delhi, Gurgaon and NOIDA, topped the list with 9 companies, followed by Bangalore with 8 companies. Chennai and Pune had 4 companies each, followed by Mumbai at 3 and Trivandrum at 2. Notably absent from the top 30 is Hyderabad as a city of principal operations.


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Please participate in the discussion around these findings at the ProductNation blog.

http://pn.ispirt.in/india-b2b-software-products-sector-maturing-with-global-focus/


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AppendixiSPIxB2B Tracker

Top 30 Companies

The index is tracked in US Dollars and Indian Rupees.

Based on the data collected, the top 30 companies in alphabetical order are as follows:

iSPIxB2B Value as of Oct 30’14 Value as of June 30’15

iSPIxB2B–USD 100 120

iSPIxB2B–INR 100 128

Top30 Value–USD $6.2 Billion $10.25 Billion

Top30 Value–INR `37,500 Crores `65,573 Crores

Employee Base 18,250 21,200Note: Please refer to the Index Calculation Section for detailed notes on calculations


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Top 30 Companies Detailed Information

Sl. No. Company Name Profile1 Accelya Kale Solutions Description: Accelya Kale Solutions Limited is part of the Accelya Group,

a leading solutions provider to the Airline and Travel industry.

Chairman : Philippe LesueurCEO: Vipul JainDomicile: IndiaPrincipal India operations: Pune (HQ: Pune)URL: www.accelyakale.com

2 AdNear Description: AdNear is the leading location intelligence platform that leverages location and context to power data driven marketing for advertisers.

CEO & Founder: Anil MathewsDomicile: SingaporePrincipal India operations: Bangalore (HQ: Singapore)URL: www.adnear.com

3 Browser Stack Description: BrowserStack is a Cross Browser Testing Tool to test your website for cross browser compatibility on real browsers.

CEO and Co-founder: Ritesh AroraDomicile: IndiaPrincipal India operations: Mumbai (HQ: Mumbai)URL: www.browserstack.com

4 Capillary Technologies Description: Capillary offers Customer Engagement Management solutions that enable retail marketers to manage customer data, gain insights & personalize engagement

CEO and Co-founder: Aneesh ReddyDomicile: SingaporePrincipal India operations: Bangalore (HQ: Singapore)URL: www.capillarytech.com

5 CRMnext Description: CRMnext is a leading cloud based customer relationship management(CRM) solution company.

CEO & Founder: Nishant SinghDomicile: IndiaPrincipal India operations: NCR (HQ: NCR)URL: www.crmnext.com

http://www.capillarytech.com

http://www.ekaplus.com


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Sl. No. Company Name Profile

6 Druva Software Description: Druva offers integrated enterprise online backup, secure file sharing and data analytics for protection and governance of endpoint data.

CEO and Founder: Jaspreet SinghDomicile: USAPrincipal India operations: Pune (HQ: Silicon Valley)URL: www.druva.com

7 Eka Software Solutions Description: Eka is the global leader in providing Smart Commodity Management software solutions. Eka’s analytics-driven, end-to-end Smart Commodity Management platform enables companies to efficiently and profitably meet the challenges of complex and volatile markets.

CEO & Founder: Manav GargDomicile: IndiaPrincipal India operations: Bangalore (HQ: Bangalore)URL: www.ekaplus.com

8 Freshdesk Description: Freshdesk is a cloud-based customer support software that lets you support customers through traditional channels like phone and email, social channels like Facebook and Twitter, and your own branded community.

CEO and Founder: Girish MathruboothamDomicile: USAPrincipal India operations: Chennai (HQ: Chennai)URL: www.freshdesk.com

9 IBS Software Services Description: IBS is a solution provider offering a variety of different software products for global airlines such as airline reservation, cargo revenue accounting, tour booking, crew and hotel management systems.

Founder & Executive Chairman: V K MathewsCEO: Rajiv ShahDomicile: IndiaPrincipal India operations: Trivandrum (HQ:Trivandrum)URL: www.ibsplc.com

10 Indian Energy Exchange Description: Indian Energy Exchange Ltd. (IEX) is India’s premier power trading platform.

CEO: S. N. GoelDomicile: IndiaPrincipal India operations: NCR (HQ: NCR)URL: www.iexindia.com

11 Indix Description: Indix is a Product Intelligence company delivering product information, insights, and analytics for brands, retailers, and developers.

CEO: Sanjay ParthasarthyDomicile: USAPrincipal India operations: Chennai (HQ: Seattle, WA)URL: www.indix.com



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Sl. No. Company Name Profile

12 Infrasoft Tech Description: InfrasoftTech is a software products, solutions and services provider focused on Banking, Financial Services & Insurance sector.

Group MD: Hanuman TripathiCEO: Rajesh MirjankarDomicile: IndiaPrincipal India operations: Mumbai (HQ: Mumbai)URL: www.infrasofttech.com

13 Inmobi Description: InMobi enables the world’s leading brands, developers, and publishers to engage global consumers through mobile advertising.

CEO and Founder: Naveen TewariDomicile: SingaporePrincipal India operations: Bangalore (HQ: Bangalore)URL: www.inmobi.com

14 Kayako Description: Kayako offers Help Desk Software and Customer Service Software to Improve customer satisfaction and increase sales, both as SaaS & On-Premise.

CEO and Founder: Varun ShoorDomicile: United KingdomPrincipal India operations: NCR (HQ: London)URL: www.kayako.com

15 Knowlarity Communications

Description: Knowlarity provides virtual number solutions, virtual pbx and virtual phone systems, with the help of which a company can keep a track of their leads.

Managing Director: Ambarish GuptaDomicile: SingaporePrincipal India operations: NCR (HQ: Singapore)URL: www.knowlarity.com

16 Newgen Software Technologies

Description: Newgen Software is a leading provider of Business Process Management (BPM), Enterprise Content Management (ECM), CCM, DMS, Workflow and Process Automation.

Managing Director: Diwakar NigamDomicile: IndiaPrincipal India operations: NCR (HQ: NCR)URL: www.newgensoft.com

17 Nucleus Software Description: Global Banking Software Product and Solutions Providers focused in the areas of Retail Banking, Corporate Banking, Lending Soft-ware, Lending Solution, Cash Management, Transaction Banking, Integrat-ed Transaction Banking & Mobility Solution

CEO and Founder: Vishnu R. DusadDomicile: IndiaPrincipal India operations: NCR (HQ: NCR)URL: www.nucleussoftware.com


http://www.kayako.com

http://www.newgensoft.com

http://www.nucleussoftware.com


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Sl. No. Company Name Profile18 Ozone Media Solutions Description: Ozone Media is a Global Advertising Technology Company

focused on online advertising.

CEO and Founder: Kiran GopinathDomicile: IndiaPrincipal India operations: Bangalore (HQ:Bangalore)URL: www.ozonemedia.com

19 Pubmatic Description: PubMatic is a global technology platform that powers the programmatic advertising strategy of leading publishers and premium brands.

CEO and Co-founder: Rajeev GoelDomicile: USAPrincipal India operations: Pune (HQ: Silicon Valley)URL: www.pubmatic.com

20 Quick Heal Technologies Description: Quick Heal Technologies provides IT security solutions for your PC, Mac, Mobile, Tablet, and Enterprise Network.

CEO: Kailash KatkarDomicile: IndiaPrincipal India operations: Pune (HQ: Pune)URL: www.quickheal.com

21 Ramco Systems Description: Ramco Systems offers next-generation enterprise solutions across cloud, mobile and tablets that render transformation of business in real-time.

CEO: Virender AggarwalDomicile: IndiaPrincipal India operations: Chennai (HQ: Chennai)URL: www.ramco.com


http://www.ozonemedia.com

http://www.pubmatic.com

http://www.quickheal.com

http://www.ramco.com


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Sl. No. Company Name Profile22 Rategain Description: RateGain offers hotel channel management, hotel channel

manager and promotion management to travel and hospitality industry.

CEO and Founder: Bhanu ChopraDomicile: IndiaPrincipal India operations: NCR (HQ: NCR)URL: www.rategain.com

23 SunTec Business Solutions

Description: SunTec Business Solutions is the leading provider of revenue management and business assurance solutions to banks, financial institutions and communications services companies.

President, CEO and Founder: K Nanda KumarDomicile: IndiaPrincipal India operations: Trivandrum (HQ: Trivandrum)URL: www.suntecgroup.com

24 SVG Media Description: SVG Media is a leading Indian Digital Media Network with 45 Million Unique Visitors in India.

CEO and Founder: Manish VijDomicile: IndiaPrincipal India operations: NCR (HQ:NCR)URL: www.svgmedia.in

25 Tally Description: Tally Solutions is a market and technology leader in ERP software solutions.

MD and Founder: Bharat GoenkaDomicile: IndiaPrincipal India operations: Bangalore (HQ: Bangalore)URL: www.tallysolutions.com


http://www.rategain.com

http://www.suntecgroup.com

http://www.svgmedia.in

http://www.tallysolutions.com


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Sl. No. Company Name Profile26 Vizury Description: Vizury helps marketers secure customers through

dynamic creative retargeting and display solutions

CEO and co-founder: Chetan KulkarniDomicile: IndiaPrincipal India operations: Bangalore (HQ: Bangalore)URL: www.vizury.com

27 Vserv Description: Vserv is a leading mobile marketing platform provider

CEO and co-founder: Dippak KhuranaDomicile: IndiaPrincipal India operations: Mumbai (HQ: Mumbai)URL: www.vserv.com

28 Wingify Description: Wingify offers testing and optimization products to websites and apps.

CEO and Founder: Paras ChopraDomicile: IndiaPrincipal India operations: NCR (HQ: NCR)URL: www.wingify.com

29 Wooqer Description: Wooqer helps people to structure work and measure results without sms, emails, phonecalls and spreadsheets.

CEO and Founder: Vishal PurohitDomicile: IndiaPrincipal India operations: Bangalore (HQ: Bangalore)URL: www.wooqer.com

30 Zoho Corporation Description: Zoho offers a suite of online web applications geared towards increasing productivity and collaboration. Products include a word processor, spreadsheet application, presentation tool etc.

CEO and Founder: Sridhar VembuDomicile: USAPrincipal India operations: Chennai (HQ: Silicon Valley)URL: www.zoho.com


http://www.vizury.com

http://www.vserv.com

http://www.wingify.com

http://www.wooqer.com

http://www.zoho.com


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Index Calculation

Other feature of the index:

The index consists of the top 30 companies in India, based on company valuations - the valuation methodology is described later in this appendix. The index indicates the change in the sum total of the valuation figures of the companies surviving into the top 30 companies of this edition of the in-dex, from the previous edition. The index was set at 100 at October 30, 2014 when the first edition was published.

The index will also be reported in USD and INR as the sum total of the valuation figures of the top 30 companies in each current edition of the index.

iSPIxB2B = India Software Products Industry Index - B2BVn = Valuation of Company n in USD or INRt = time of current publication of indext-1 = time of immediate previous edition of indexn = component numbera = component number of the companies surviving from previous edition of index to current edition of index

6 The index is a price return index 6 Component number : 30 (Top Companies) 6 Component Selection and Criteria: Described in the Company Selection section which follows 6 Component Valuation: Described in the Valuation Methodology section which follows 6 Review and Calculation Frequency: 6 months 6 Date of first calculation: 31 October 2014


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Data Collected

Index Composition

The following key data was collected from the companies, institutional investors or public sources:

Certain companies are new entrants and other companies have come off the list. The changes are due to increased valuations in some cases or having access to data from certain companies for the first time. Many companies are clustered around the similar valuation numbers and slight changes in growth rates and revenue change the implied market value and therefore the ordering. Others had been acquired or were found to be overweight on services relative to products.

The index itself changes based on the relative valuations of those companies present in both editions of the. In other words, the index does not taken into account relative valuations of companies that were either taken off the top 30 list or were new entrants to the top 30 list.

6 Company Name, Profile, Founding Year, Employee Count 6 Contact Details 6 Country of legal domicile, City of principal operations 6 Website URL 6 Financial Data

� Valuation in USD and INR for Institutionally funded companies � Revenues in USD and INR for non-funded companies � Public market valuation in INR for public companies.

Company SelectionMore than 300 Indian B2B software product companies were identified. The list was compiled from various internal and external sources. We contacted over 100 companies and gathered data on a substantial majority of these companies either directly from the companies, their investors or public markets exchanges. The goal was to identify the top 30 companies in terms of valuation and use the valuation number to compute the index as described in the previous section.

We included companies that met the following criteria:

A few very prominent companies are absent from the list as they declined to participate in the SPIxB2B project.

6 the company sells software to businesses on a license or subscription basis OR 6 the company provides a B2B service driven through a differentiated software offering AND 6 the company was founded in India or had co-founders who were based in India and else-

where simultaneously


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Edition 1: Oct 30, 2014 Edition 2: June 30, 2015Accelerite XAccelya Kale X New entrantAdNear X XBrowserStack X New entrantCapillary X XCRMnext X New entrantDruva X XEka X XFreshdesk X XIBS X XIEX X XIlantus XIndix X New entrantInfrasoftTech X XInMobi X New entrantKayako X XKnowlarity X New entrantKomli Media XManthan XNewgen X XNucleus X XOzone X XPubmatic X XQubole XQuick Heal X XRamco X XRategain X XReal Image Media XSuntec X XSVG X XTally X XVizury X XVserv X XWingify X XWooqer X XZoho X X


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Acknowledgements

We would like to thank all the companies and their investors for sharing data with us. In addition the authors of this report would like to acknowledge the following people for their contribution and support to the project.

6 Professor Sharique Hasan, Stanford Graduate School of Business, Stanford University 6 Professor Rishi Krishnan, Indian Institute of Management, Bangalore 6 Market and valuation information from Signal Hill 6 The volunteers at iSPIRT 6 Design by Rakesh Mondal

Contact the iSPIx team at [email protected] with any questions, comments or suggestions for other companies to consider for the next edition of the index.

Valuation Methodology

Confidentiality

We came across three types of companies and arrived at their market valuation correspondingly:• 1) Public companies - we used the latest market valuation data from Moneycontrol.com.• 2) Recently venture-backed companies - we used the post-money valuation of their latest

financing if the financing was in the past year.• 3) Bootstrapped companies or venture-backed companies financing over a year ago - we

derived a valuation using revenue multiples. Revenue multiples by sector were obtained from reputable investment banks and were adjusted based on differing growth rates.

We understand that company valuation in general, and this methodology specifically, will not result in exact results. However, we believe that the results are directionally correct and generally in the right ball park. We believe these results are of enough quality to support an educated discussion as well as drive decisions from strategic partners and governments regarding the Indian software product industry.

In general, data has been provided by companies and their investors. No company-specific data obtained for the purposes of this index have been published nor will be published. We are only publishing aggregate data. We respect the sensitivity of this data.

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