The lofty valuations of India’s consumer-focused startups like Flipkart and Snapdeal have gotten a lot of limelight lately, but the country’s up and coming software product technology firms are also growing rapidly, says iSpirit Foundation, a Bangalore-based technology lobby group.
An index capturing the 30 most-valuable Indian software product-makers has risen by 28% in eight months since Oct. 30, a report released by iSpirit, which puts together the index, said Thursday. These companies, as estimated by iSpirit, were worth a total of $10 billion at the end of June. “There has been an acceleration since 2010 in the pace of creation of B2B (business-to-business) companies,” the report said.
More In Technology The Successful Indian Tech Companies You’ve Probably Never Heard Of Are You Addicted to the Internet? Take the Test Internet Addiction: How to Help Protect Your Children 5 Things to Know about Foxconn’s Ambitions in India Uber to Invest $1 Billion in India Indian techies and venture capitalists often rue that though Indians occupy top positions in global tech companies like Microsoft Corp.MSFT +3.55% and Oracle ORCL +2.05% Corp, the country hasn’t produced a major software firm up to the caliber of these multinationals.
In December, a Silicon Valley-based entrepreneurship trade body, the Indus Entrepreneurs, launched a program to help grow a select number of Indian product companies to become worth a billion dollars or more each. To help garner attention for software-product makers, iSpirit created its index last year. For this, it considered more than 300 Indian companies that make and sell software or provide applications that support other businesses. The index doesn’t include technology outsourcing firms like Infosys Ltd.500209.BY +3.56% and Tata Consultancy Services Ltd.532540.BY -0.08%, or consumer-oriented technology companies, like Flipkart and ANI Technologies Pvt Ltd.-owned Ola, a taxi-hailing application, which use technology to sell products to individuals. Companies included are firms like Bangalore-based InMobi Technology Services Pvt. Ltd., which competes with Google Inc.GOOGL +2.69% and Facebook Inc.FB +2.96% globally to provide a mobile advertising platform, and Delhi-based Wingify Software Pvt. Ltd, which analyses web-user data to enable companies to create more effective webpages.
Other companies are Capillary Technologies, which creates software that helps retailers manage customer data and counts shoemaker Nike NKE +1.91% and Pizza Hut among its customers, and Druva Software Pvt. Ltd., which provides data backup and other services to companies like Dell Inc. The index also has a few companies which have been around for more than two decades, such as Delhi-based Newgen Software Technologies Ltd, and accounting software-maker Tally Solutions Pvt. Ltd.
These software companies have also caught the eye of international investors in recent years. “There’s a consistent amount of capital going in…I wouldn’t say it’s a flood,” said Dev Khare, managing director of Lightspeed India Partners Advisors LLP, a venture-capital firm. Mr. Khare volunteers with iSpirit and helped put together the report on technology firms. In rupee terms, the 30 most-valuable companies as estimated by iSpirit were worth 655 billion rupees ($10 billion) at the end of June, versus 375 billion rupees at the end of October. The composition of the index has changed, to include some companies whose valuations have grown rapidly since the fall. To be sure, these valuations pale in comparison to that of Indian consumer companies. Flipkart alone was valued at $15 billion in May following a round of capital raising, up from $10 billion in December. Mr. Khare said that though consumer-focused tech companies have gotten a larger share of investor capital in recent years, historically, both consumer and software-product companies have provided good returns to investors. Many of the new Indian software companies are creating products for the tech consumer companies, such as software to manage customers who buy online, or software to manage logistics. Two-thirds of the 30 companies in the iSpirit index are based in India, while others are domiciled in Singapore and Silicon Valley. Most of the companies sell their products to clients globally. “As the conditions become more favorable, more capital will flow into these companies as well,” said Mr. Khare.