SaaSBoomi slashes startups’ enterprise value forecast for 2030 by 50%

“We have plotted a conservative projection of the market in the range of $0.5 trillion to $1 trillion. This is taking into account current market conditions. Market contingencies may however be different in 2030, and enterprise values may recover fully and be better by then,” Manav Garg, founder of Eka Software and Together Fund, which is part of SaaSBoomi, told ET.

In 2021, in its report titled ‘Shaping India’s SaaS Landscape’, SaaSBoomi had said Indian SaaS companies can increase their revenues to $50-$70 billion by the end of the decade, lending the industry a $1-trillion valuation based on public SaaS company revenue multiples.

Also read | Together unveils new fund worth $150 million, to back opportunities in Gen AI space

Despite the fall in enterprise value, the revenue projection of $50-70 billion remained consistent in the latest report, released Thursday.

Near-term demand environments are likely to be tough, given the tightening of the US economy, an important go-to market for SaaS companies, the report said.

Discover the stories of your interest

Enterprise-value corrections or projections rely on public market valuations. Global private equity and venture capital software investments have been on the decline quarter on quarter since the first quarter of 2021. Economic shocks have hit the US, led by a 4-fold rise in interest rates to 4.3% in 2023 from 0.5% in 2020.On a brighter note, Indian SaaS companies, the report added, currently account for 2% of the global software-as-a-service (SaaS) market, with $7 billion in revenues, far exceeding earlier projections. The total revenue figure stood at $2.6 billion in 2020, indicating a 169% jump since then.

Also read | Indian SaaS in the middle of a great reset in funding winter

There has been similar growth globally, the report said. In the last two years, the global SaaS market has expanded to about $420 billion, growing at a 38% compound annual growth rate, exceeding earlier growth projections for 2022 by nearly 150%.

Revenues globally are likely to reach $1.3-1.6 trillion by 2030, representing a growth of 15-18% per year between 2022 and 2030.

Key opportunity in Gen AI
Among ‘watershed moments’ for SaaS, the report said that the software industry is on the cusp of a significant paradigm shift, moving from SaaS to ‘SaaS.AI’. This, it said, was triggered by the performance of Generative Artificial Intelligence (Gen AI). “We are witnessing an explosion in the number of Gen AI-native SaaS companies and a surge in investment capital, with over $12 billion funnelled into 60+ emerging domains in FY23,” it added.

Also read | ‘2026 revenue forecast for SaaS startups plunges 74% to $26 billion’

In India, the number of startups in the Gen AI segment has more than doubled since 2021 and raised over $590 million as of May 2023.

Four distinct strategies can be deployed by founders in India to leverage the structural advantages of this uptake, the report added: focusing on AI-first SaaS domains, transforming core workflows with Gen AI, launching developer-centric tools around Gen AI, and building new foundational models.