Indian Business Software Startups Become More Valuable As Venture Interest Increases

BANGALORE -- Indian startups that create business software are becoming more valuable, according to a report by the Indian Software Product Industry Roundtable (ISPIRT).

The dollar value of the top 30 firms measured in terms of the price-return index -- which tracks value without accounting for revenue or income -- rose by 20 percent between October 2014 and June 2015, ISPIRT said in a report Thursday.

“There has been an acceleration since 2010 in the pace of creation of business-to-business companies. Vertically-focused offerings in retail, travel, financial services, media have reached scale and we are likely to see some larger exits in terms of IPOs or M&A over the next couple of years,” Dev Khare, a principal at Lightspeed Venture Partners in New Delhi, wrote in a post on ISPIRT’s blog.

The total value of the top 30 companies in the index rose to $10.25 billion through June 30, up from $6.2 billion on Oct. 30, according to the report. The industry lobby put together the index in 2014 and set the base value as 100. The index now stands at 120 in dollar terms and at 128 in Indian rupee terms.

The rise of cloud computing has helped many of these companies build products in India and sell online to customers in the U.S. and other markets -- a trend reflected in 80 percent of the top 30 companies who mainly serve customers outside India. Some have more conventional business models as well, selling software packages with licenses.

About two-thirds of these startups are based in India, but that “masks a significant shift since 2009 with many of the Indian B2B software companies incorporating in the U.S. or Singapore,” ISPIRT said in its report.

Indian startups have often complained of red tape, poor physical infrastructure and other obstacles in India that make locations such as Singapore, Silicon Valley or the U.K. more attractive. Still, the companies in the index -- which has a few new entrants this year -- all have Indian founders or co-founders, and much of their operations are based in the country as well, the lobby said.

InMobi, for instance, a mobile advertisement technology leader, is based in Singapore. Druva Software, which offers enterprise backup is based in Silicon Valley, but has a center in Pune, India. Eka Software provides commodity-trading software to customers around the world, but is based in Bangalore, according to the ISPIRT report.