The Indian Software-as-a-Service (SaaS) industry is projected to grow by 2.5X to reach proceeds of $26 billion by the end of 2026 despite an existing slowdown amid tight macroeconomic pressure and a firm funding winter.

Indian SaaS corporations are doubling down on development (revenue generation) while safeguarding operational and capital efficiency, the report stated. Indian SaaS equity funding plunged 30% to $419 million in 2022 with 2,780 deals as against 2,605 deals in 2021 with an aggregate funding of $319 million.

Despite a commonly approved funding winter in the Indian start-up ecosystem, seed-stage funding saw a 1.5X increase. In contrast, the report added that early-stage funding skilled a notable 1.6X surge in value during 2022. In fact, Indian SaaS start-ups secured 3X more funding in 2022 related to 2019, signifying a steady CAGR of 47%. The downfall in SaaS company valuations in the public markets has critically affected private markets, driving down late-stage funding.

Besides, delayed sales cycles are a key task for founders as customers focus on upsurges as they aim to optimise cloud costs.

The Indian SaaS ecosystem has demonstrated remarkable malleability and resilience in recessions and external troubles. This ‘herd immunity’ designates that Indian SaaS companies are not just prepared to endure in challenging times but are dignified to adapt, evolve, and emerge stronger, said Atit Danak, Zinnov Partner.

The SaaS report mentioned that founders and investors are optimistic about valuation multiples returning to pre-pandemic levels in the succeeding 12-18 months.