SaaS Startups 2026 Revenue Forecast Marked Down To $26 Mn From $100 Mn

The latest report by Chiratae-Zinnov India on SaaS startups has revised the earlier forecast of the segment clocking a massive USD 100 billion in revenues by 2026. The new forecast expects SaaS startups to register over USD 26 billion in revenues by 2026.

The data indicates that while seed and early-stage investments in the SaaS sector saw an increase in 2022 compared to the previous year, late-stage investments experienced a decrease. Nonetheless, the overall outlook remains optimistic, with 93 per cent of founders projecting revenue growth and 55 per cent of investors anticipating an increase in deal activity over the next 12 months.

The SaaS market in India is being driven by several opportunity areas. DevOps, Cybersecurity, Vertical SaaS, Generative AI and Web 3 are among the top drivers of innovation and growth. DevOps tools, in particular, are well-positioned to streamline operations, and with India housing 10 per cent of the global developer base, the country has the potential to disrupt the DevOps market.

In the realm of cybersecurity, venture capital funding has been on the rise, with over USD 18 billion invested in the sector in 2022 across more than 1,000 deals. This surge in funding underscores the growing importance of cybersecurity solutions and the market's attractiveness for investors.

Vertical SaaS startups, which cater to specific industries, are expected to gain 80 per cent favor from investors in 2023, further driving growth in the sector compared to previous years. This indicates a shift towards more specialized and tailored SaaS solutions to meet industry-specific needs.

Generative AI, a rapidly evolving field, has seen exponential growth in venture capital funding for start-ups. With USD 50 billion invested in Generative AI in 2022, the sector has demonstrated its potential. India is leading the way in AI product development, boasting approximately 16 per cent of the global AI workforce.

The report noted that number of funded SaaS startups in India has more than doubled in the past four years, reaching a staggering 1,650 plus active funded firms. It also highlighted the increasing number of Indian SaaS unicorns, with 80 per cent of B2B SaaS unicorns emerging in the last three years alone.