Software-as-a-Service (SaaS) accelerator fund Upekkha will focus on and invest in startups that are developing innovative generative AI software applications, betting big on the segment.
“We are now a fund and accelerator for Indian founders with global aspirations and a focus on AI. As an AI SaaS fund and accelerator for Indian founders we are uniquely positioned to help them capitalise on this new platform shift,” said Thiyagarajan Maruthavanan, cofounder and managing partner of Upekkha in an interaction with Moneycontrol.
"Every big SaaS company of the next decade will be powered by AI, it is like the gadget underneath and one should keep up with the gadget to remain relevant," he added.
Generative AI is a type of AI technology capable of producing various types of content, such as text, imagery, and audio, through input prompts, much like asking a question. Some notable Gen AI SaaS startups from India include Composio, Workhack and Rapidclaims.
Generative AI has become the buzzword, attracting software giants like SAP, Salesforce and IBM to explore this space. While the West has been quick to adopt generative AI, Indian SaaS and tech companies are now jumping on the bandwagon.
"We recognise the shift, in some places the shift may look like a hype cycle, but in AI it is completely different. It is no more a hype,” Maruthavanan added.
The move comes just weeks after Google announced its first AI Startup Accelerator Cohort. The Google programme includes 13 startups from eight different countries and all participants are leveraging AI and ML technologies and should showcase the potential to solve significant problems and have the potential to transform their respective industries.
Upekkha plans to invest close to $125,000 in each startup, with two cohorts of 40 startups each per year. The platform will adopt a Y Combinator approach to equity and deployments.
“YC for India SaaS is something we have been called for some years now, and we will be taking a slight pricing model change now for the upcoming cohort we will offer $125K for 7 percent equity. We are making it very global-like in terms of standards and training,” Maruthavanan said.
Founded in 2017 by Prasanna Krishnamoorthy, Maruthavanan and Shekar Nair, Upekkha is a SaaS accelerator platform that mentors and trains SaaS companies.
Over the last 6 years, Upekkha has collaborated with more than 250 Indian B2B SaaS founders. Some of its portfolio companies include API Platform, Almabase, Gimlet.ai, Labellerr and more.
Upekkha has made a few management changes on the back of this change in its focus area.
Maruthavanan has taken on the additional role of CEO, while Nair and Krishnamoorthy continue as Managing Partners and founding board members. Gokul Kunnel Subash Bose has been promoted to Partner and will focus on scaling the accelerator.
"We are scaling and taking up some organisational changes. We always aimed to work with around 1,000-1,500 startups. We have shifted our view from being a small-scale firm to a large-scale firm,” Maruthavanan told Moneycontrol.
Hotspots of activity around Gen AI are emerging, particularly in horizontal applications space like marketing automation, sales and customer support, audio-video design tools, and productivity tools.
“We are looking for domain-specific founders like one who has focussed and spent a lot of time in HR or cloud or marketing etc...We also look for founders who have global orientation,” Maruthavanan said.
SaaS firms riding the GenAI wave
From creating new AI capabilities to integrating AI chatbot ChatGPT into customer-centric operations, India’s top software-as-a-service (SaaS) firms are investing and exploring the booming generative AI technology to attract investors and eventually bring down their customer acquisition costs.
Girish Mathrubootham, CEO of cloud-based software services company Freshworks, said in an interview that the firm will make significant investments to integrate AI, especially generative AI, into its operations.
Indian SaaS giant Zoho also announced the launch of 13 generative AI application extensions and integrations, powered by ChatGPT.
Investors are betting big on AI SaaS to stay ahead of the curve
“Ten years ago the rise of the cloud shifted how software business was built, deployed and sold…. The rise of SaaS.ai is a catalyst that is as big as the cloud if not more and provides a similar parallel in opportunity for Indian founders,” Maruthavanan said.
Amid rapid adoption and rising demand for Gen AI tools like ChatGPT, the number of Indian GenAI-based SaaS startups has more than doubled since 2021, raising $590 million in funding as of May 2023, according to a report by SaaSBoomi and McKinsey released on July 27.
In fact, from around 18 AI-centric startups as of 2021, there are around 60 GenAI startups in India as of Q2 of 2023 and the number keeps growing.
Several top VC firms have also announced that their focus areas will be on generative AI.
Together Fund which launched its Fund II on July 27th with a total corpus of $150 million is looking to invest in companies that solve problems using generative AI.
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