Investment in Indian software-as-a-service start-ups has reached a record $4.5 billion in 2021, close to thrice the amount in the previous year, according to a report by Bain and Company.

Indian SaaS start-ups raised about $1.7 billion in 2020 and $1.3 billion in 2019, the consultancy firm said in a report.

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This year six companies entered the unicorn list after being valued at over a billion dollars or more. This is equal to the previous two years put together, which indicates an increased momentum in the industry as they reach global markets, especially in the US and Europe.

Investment in SaaS companies comprises nearly 8% of total venture capital investment in Indian start-ups in 2021, according to Bain’s ‘Indian SaaS Report 2021’ issued on December 6.

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In 2021, the average value of seed rounds increased by 85% as compared to 2019. The size of late-stage investment in Indian SaaS companies has also increased, with the top 15 deals comprising 75% of the overall capital attracted by the industry.

The revenue of SaaS firms is expected to grow from $7 billion now to touch $25 billion in the coming few years.

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This year, more than 35 Indian SaaS firms touched $20 million ARR (annual recurring revenue) or more, a seven times increase in five years. Nine of these firms achieved the $100 million ARR target, compared with  two companies five years ago, according to Bain.

Currently, there are 9,000 SaaS start-ups, which are either founded by entrepreneurs of Indian origin or have a large workforce in India. This figure stood at around 5000, five years ago.

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Horizontal business software, including enterprise collaboration, events tech, artificial intelligence (AI), and human resources (HR) continue to be the leading segment for investors in the post-pandemic world.

Horizontal business software providers contribute nearly 60% of the overall deal value being put into Indian SaaS startups.

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In September 2021, Girish Mathrubootham-led Freshworks became the first Indian company to trade on a US exchange after being successfully listed on the Nasdaq Global Select Market exchange.