VC fund sets up global index to track enterprise SaaS firms

The SEBI-approved fund, which has been investing in early-stage and high-growth SaaS firms, believes this to be a game changing index, given that $20 billion is the global revenue estimated from enterprise SaaS firms.

““FAANG (Facebook, Amazon, Apple, Netflix and Google) are no longer the flavour as enterprise SaaS firms are gaining visibility and traction like never before. When brands like Freshworks, Zoho and Icertis have established themselves in the SaaS framework, India now has the potential to grab at least 10 per cent of the global SaaS market within three years,” observed Abhishek Prasad, Managing Partner, CSVP, set up in 2018. Incidentally, CSVP has identified a Chennai-based SaaS entity to park its fund and a formal announcement is around the corner.

Speaking to DTNext, he said “we have been focused on building a portfolio of B2B tech startups that are well on their path to creating massive value-impact for their enterprise customers. Our thesis is to invest exclusively in ‘Enterprise SaaS’ models.”

CSVP was started by him and Rajiv Vaishnav, when the duo at Reliance found the need to leverage the network and capabilities that they had acquired in their effort of incubating many ventures. “This was more an adjunct activity at Reliance. We decided to exit to create this new fund so that we can make it purposeful,” said Abhishek.

“We target early-stage, high-growth SaaS companies that are building transformative solutions for enterprises and small and medium businesses,” he added.

From being a typically Pre-Series A and Series A stage investor, the idea of setting up the index cropped up, to reinforce the SaaS ecosystem of the country. “This index, is composed of the top 30 globally-listed public Enterprise SaaS companies, such as Salesforce, Zoom, Shopify, and tracks the movement of these stocks on global stock exchanges real-time. The Index tracks comparative performance with Nasdaq Composite, S&P 500, and the Dow Jones Index, and has shown tremendous growth over the last 24 months (outperforming these indices by a factor of 100-200%),” Abhishek sought to point out.

Unlike indices that are market-cap based, CGES Index not only tracks performance of highly scalable firms but is also focused on pure-play enterprise (B2B) SaaS firms across industries. “We found while there was a huge interest for consumer driven opportunities (retail, fashion, consumer spending), there was an untapped B2B segment. With the confidence exuded by entrepreneurs, founders showing maturity, when they scouted for funding, tech focused funds to pure-play enterprise SaaS firms, seemed to be the logical progression,” Abhishek said.

An understanding of the US ecosystem made the duo upbeat enough to launch the index recently, that would help in sharpening the focus on enterprise SaaS. “We found 60 to 70 pc Cloud-based solutions were SaaS driven,” he said, adding plans were afoot to launch an India-focused index too comprising private enterprise companies soon.

With a near-term goal of closing $50 million, the fund intends to launch the second one of $200 million in two years. “Rather than having investors wait for a unicorn outcome, 20 to 25 portfolio companies, of which turning 5 to 7 companies into a $100 mn entity seems far more prudent,” Abhishek signed off.