Jaspreet Singh wears the tag of a unicorn founder lightly. “Revenues matter more,” he says during an early morning telephone call from Sunnyvale, California, where Druva, the SaaS-based cloud data protection firm he co-founded over a decade ago is headquartered.
Late last month, Druva became only the second India-born SaaS startup, after San Mateo, California-based Freshworks Inc, to gain admission into the coveted club of unicorns, industry parlance for technology startups valued at $1 billion or more. The valuation bump up came courtesy a $130 million funding round led by US-based hedge fund Viking Global Investors. Other new investors in the round included asset management firm Neuberger Berman and private equity firm Atreides Capital, both also based in the US.
The latest round, Singh says, takes the company’s valuation “well past $1 billion.”
But, for Singh and co-founder Milind Borate, hitting the $1 billion-plus valuation mark is just another stepping stone, though a significant one, to their big goal -- taking Druva public. “We had a good term sheet last year (from a different set of investors) but passed… the timing wasn’t right,” he says. The founders were looking for an investor who understood the public markets and decided to wait. “Viking was interesting as a partner,” he adds.
With the right mix of investors now on board, Singh says that a public offering could happen as early as 12-18 months from now and the roadmap will become clear over the next six months.
If Druva does go public in 12-18 months, the development would mark a critical milestone for homegrown SaaS startups.
India, according to data compiled by research firm Tracxn, is home to more than 8,000 SaaS startups. The country’s SaaS market, according to software services industry lobby Nasscom, is estimated to touch $3.4 billion by 2022. However, while the adoption of SaaS-based solutions has been gaining ground across sectors such as financial services and healthcare, the market is dominated by large players such as Salesforce, SAP and IBM.
“The Indian market is not mature enough to buy from small companies,” Kris Gopalakrishnan, Infosys co-founder and founding partner at early stage investment firm Axilor Ventures, told TechCircle in a recent interview where he was speaking about the overall challenges faced by enterprise technology startups. “Therefore, such startups are compelled to go global early in their evolution,” he said.
Indeed, many of the challenges that Gopalakrishnan refers to are exemplified in Druva’s journey from Pune to Sunnyvale.
When Singh started Druva in 2008 with Milind Borate and Ramani Kothandaraman (Kothandaraman moved on from the startup a few years ago) -- the three met as colleagues at data management firm Veritas Software -- SaaS was barely part of the Indian startup ecosystem’s lexicon. They started off in the cloud backup market as a licensed software company but decided to pivot to a subscription model after about four years.
“When we pivoted, we were trying to solve the problem of data protection and management, which is an elastic workload. The elegance and simplicity of solving this problem was to put the technology stack was on the cloud and drive value out of it. It was also part of the reason we were excited about it,” says Singh. The downside of the pivot was that the market in India wasn’t yet ready for the kind of solution that Druva was offering. “We lost a few customers as they were not ready for the cloud yet. Some of them came around in three to four years,” he says.
The move to California was a necessary outcome of the pivot. Access to customers in the US market, which was ahead in the learning curve for cloud-based solutions, was far easier than in India. It also helped that in early 2010, Sequoia Capital India, the local arm of one of Silicon Valley’s most influential venture capital firms, got on board at Druva as an investor, leading a $5 million Series A funding round.
Since then, access to customers and investors hasn’t been the uphill task it may have been if the company had continued to slug it out in the Indian market.
Today its client roster includes National Cancer Institute, a part of the National Institute of Health in the US, Pall Corporation, the New York headquartered manufacturer of separation and filtration products, pharmaceuticals companies Allergan and Pfizer and even NASA and Pfizer. In India, it now works with engineering and construction conglomerate Larsen & Toubro, aviation company Indigo and pharmaceuticals player Cipla, among several others.
Along the way, it has been able to attract more than $300 million in funding, including the latest $130 million round, from multiple investors such as Riverwood Capital, NTT Finance and Nexus Venture Partners.
While Singh and his colleagues prepare for the IPO, in the immediate term, the company has a slew of product launches lined up. It also plans to enter new markets such as Australia and the Nordics. The expansion into new markets comes after an 18-month push to go deep into India, Japan, Singapore and HongKong. It also plans to double its headcount at its Pune development center to 1,000 people.
The company claims to have registered an 80% growth in revenues for backup and disaster recovery of enterprise workloads in the last 12 months and doubled its international customer base. Though it does not share its financials, the founders have claimed revenues for financial years 2018-2019 to be nearing $100 million in multiple media interviews.
With its acquisition of Microsoft Ventures-backed CloudLanes, Druva plans to add another core IP to its product portfolio. “With this (acquisition) we will be working closely with Microsoft in Azure to accelerate data transfer between on-premise and cloud so that the customers can have data centre like control. We haven’t unlocked Azure yet and continue to build on AWS. It is not a revenue driven acquisition but an IP driven one,” says Singh.
The acquisition takes Druva’s quest for IP driven solutions for data born on the cloud. The company had earlier acquired another US-based company, CloudRanger, which provides backup and disaster recovery solutions for workloads on AWS.
By research firm Gartner’s estimates, the global cloud management and security market, in which Druva operates, will touch $17.9 billion by 2022 against $12.2 billion now. While that makes the canvas big for Druva, it will have to compete in part with the likes of Singapore based Acronis International, backed by Delta v-Capital and Insight Partners, and US-based Flexential Corp.
As Druva heads into the next phase of growth, its evolution could well serve as a ready template for the universe of homegrown SaaS startups trying to make their way out into the world. Though Singh says that the factors that prompted it to go global early -- access to customers in the mid-market segment and talent pool for selling to a global audience -- are not as relevant today, nearly all leading SaaS companies from India, including Freshworks, Pine Labs and ManthanRetail have taken the same course and with visible success.