Bessemer Venture Partners, a leading global venture capital and private equity firm, on Monday said that India’s startup ecosystem is set to attract $1 billion in new venture funding in 2024, which is 25% higher compared to 2023.
In India, Bessemer Venture has invested in companies such as MediAssist, Swiggy, Urban Company, Bigbasket, Pharmeasy, and The Good Glamm Group. Currently, the company’s India team is focused on internet marketplaces, health-tech, fin-tech software, and SaaS opportunities.
In its report “The Rise of SaaS in India 2024”, the company said a “significant portion” of this investment will be directed towards AI-focused companies, which are currently offering significant growth opportunities. Indian SaaS unicorns and centaurs have collectively added $5.9 billion in revenue during 2023 alone.
Additionally, India’s SaaS market is projected to reach $50 billion by 2030, with a possibility of an upward revision given the rapid advancements in AI and its integration into SaaS solutions. The survey findings also reveal that 60% of startups, previously pure SaaS companies, are now evolving into AI-enabled SaaS providers.
Anant Vidur Puri, partner at Bessemer Venture Partners, said, “2024 is the year artificial intelligence goes mainstream, marking a pivotal shift from emerging technology to a cornerstone of business and industrial operations. AI is the next revolution in software, and we expect all software to transition to AI native, AI enabled, or AI infused in some way over the coming months”.
He also said that India is in a unique position with its large base of AI developers and global leadership in business and professional services. In addition to AI, he believes cybersecurity, wealth tech, and industrial software as the three other key trends that will lead the next leg of software growth in India.
The report predicts that AI-enabled software will emerge alongside traditional SaaS, driven by the need for more advanced, intelligent solutions that enhance business operations and customer experiences. The integration of AI technologies such as machine learning, natural language processing, and advanced analytics into SaaS platforms is creating a wave of innovation, making software more intuitive, adaptive, and capable of automating complex tasks.
India’s dominance in the professional services market is expected to grow, with AI-driven automation and analytics streamlining back-office operations and enabling data-driven decision-making. AI-first service companies achieving over 65% gross margins highlight the potential for higher profitability and competitive advantage in the global market, the report said.
Further, cybersecurity is also becoming increasingly crucial, with the domestic market reaching $6 billion in 2023. Rising cyberattacks and new laws mandating stricter data protection and cybersecurity measures are driving demand for robust solutions. Cyber insurance is set to grow significantly, reaching approximately $800 million by 2030.
Additionally, the industrial sector is rapidly adopting AI and cloud technologies, driven by growth in manufacturing and global ESG regulations. The transition to cloud-based industrial SaaS solutions facilitates real-time data analytics, predictive maintenance, and enhanced supply chain management, crucial for achieving higher productivity and sustainability in industrial operations, the report said.