SaaS startups like Responsive in Coimbatore, Supersourcing in Indore, Appointy in Bhopal, DreamCast in Jaipur, Dhiwise in Surat or CallHippo in Ahmedabad – these are all examples of companies that are slowly scaling and becoming the anchor companies in these regions.
“There are SaaS startups that are maturing and reaching a certain scale and size in a number of emerging cities,” Avinash Raghava, CEO of the industry collective SaaSBoomi told ET. “This is happening across the board where there are anchor companies emerging that are having their employees leave to start their own SaaS firms. It is still in the nascent stage but we are seeing it happen increasingly now wherein I believe the next Freshworks or Zoho will not come from Chennai or Bangalore but will be from one of these emerging cities.”
With a strong focus on costs and profitability, many of these companies are bootstrapped and are focusing big time on business. While this may be at a nascent stage right now, with only a few employees from these firms starting up, it is expected to pick up pace as more people are bit by the entrepreneurial bug and venture out to build their own companies.
“There is no other way than to have this happen,” Ganesh Shankar, CEO and co-founder of Responsive said. “Those who have the entrepreneurial spirit, it is the most natural thing to happen. I can confidently say that for the size of the city, Coimbatore is definitely seeing this trend.”
He added that Responsive has seen at least three such instances of employees who have started their own SaaS companies. He said that the company has been actively mentoring them and has even provided help with funding too.
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Over 2000 kilometers away, in the Pink City, Siddharth Shah, the co-founder of DreamCast is seeing a similar trend. It has witnessed companies like Tagbox.com, Getgabs.com and Tagembed.com come up from ex-employees. Shah even sits on the captable of Tagbox.”Those who work in smaller cities come in with a different mindset of spending time in a company,” he explained. If they join a company at an early stage in these cities, invariably learn not just the craft but also the organisational structure and how a product is built which equips them to start something on their own and this is exactly what we’re seeing.”
In Bhopal which is known for its lakes, people are slowly developing a risk appetite to start their own ventures with companies like Appointy.com scaling. Nemesh Singh, CEO and co-founder of the company said the firm has three names of companies that have come out of its fold. Of these two are bootstrapped while one has gone ahead to raise funding as well. Seeing this happening increasingly, the company has set up a ‘founder program.’
“We realised that we should make it a plan in our organisation,” Singh said. “So now, we have started a founder school wherein we have decided to hire founders who are in their early stages and help them learn from here and build their companies based on our experience. We have had three founders who have joined so far. Startups are the creators of talent in these smaller cities and as the cities have more mature startups, people will be more inclined to build here.”
There’s another city in Madhya Pradesh that is seeing a lot of SaaS action and that is Indore. Inspired by Zoho’s Sridhar Vembu, Mayank Pratap Singh, co-founder of Supersourcing decided to take the plunge from the city that has been touted as the cleanest in India. And not just him, three others from his company too have taken the entrepreneurial route.
“I used to work out of Bangalore but I was very clear that I did not want to waste my life in a traffic jam,” he said. “And I derived confidence from Sridhar Vembu where I realised that if he could do it from Tenkasi, I could do it from Indore. And it has been the best decision because in Bangalore or Chennai, you can get lost in the noise. In a tier-II city, the focus is clear – profitability and cost efficiency – and as long as you deliver, customers don’t care where you work.”
Most of these founders said their enterprises remain bootstrapped for far longer than their tier-I city counterparts. Further, they focus their aim on unit economics and don’t chase valuation. They said they are more intent on building a strong business rather than growth from the get-go.
In Ahmedabad, which is slowly finding its feet as a SaaS hub, the instances of a ‘mafia’ might be few and far between, Ankit Dudhwewala, co-founder at CallHippo.com said. He said in their 10 years of operation, the company has seen about 5-6 companies branch out but said none of them have reached a meaningful scale. What he is seeing, however, is a surge in angel investment which is enabling the ecosystem.
“Today, the acceptance of entrepreneurship is much more. There is cash against equity available quite freely and that is a gamechanger for founders looking to start out. Angel investment some time back was restricted but today, the ticket size has come down to Rs 1 lakh and so people are more willing to move out and raise small funds from friends and family. In Ahmedabad, we are also seeing traditional business houses being willing to back tech startups.”
Not too far away, in the ‘diamond city,’ SaaS is really taking off but the ‘mafia’ element has taken a backseat due to challenging market conditions. Vishal Virani, CEO of DhiWise said employees either start their own firm or move to a bigger company. He attributed this to the entrepreneurial spirit of the city.
“We have around 70-80 startups in the SaaS and Gen AI space in Surat right now,” he explained. “DhiWise is only three years old and we have not seen anyone start a SaaS company yet but that is probably because of the current market conditions which are making people wary. Once things pick up, we do see more people starting their own companies because business is very much a part of Surat’s DNA.”