Japan’s SoftBank Group Corp. is in advanced discussions to lead a $100 million round in software-as-a-service firm Mindtickle, marking its first SaaS deal from its India team, said two people aware of the matter, requesting anonymity.
The investment will value Mindtickle at $500-600 million, double the $250 million it was valued at in July last year, when Norwest Venture Partners led a $40 million round.
Pune and San Francisco-based Mindtickle, founded in 2011 by Krishna Depua, Mohit Garg, Deepak Diwakar and Nishant Mungali helps companies build sales capabilities including sales training and onboarding, and working on each aspect of sales, practicing and improving it using technology.
Its products help onboard clients, provide data-driven coaching to tighten a sales pitch, host virtual events and track relationships with business partners, among other things.
According to sources, it has a revenue run rate for FY21 of about $20-25 million. This metric takes the current month’s revenue and multiples it by 12 to forecast an annual figure.
Mindtickle’s other investors include venture capital firms Accel, Silicon Valley-based Canaan Partners, Qualcomm Ventures and New Enterprise Associates.
A SoftBank spokesperson declined to comment while Mindtickle did not respond to an email seeking comment.
“SaaS is being seen as the safest bet in tech investing right now. While the economics have always been better than the consumer internet companies, today there is a lot of room to grow even for mature companies. Which is why valuation multiples are rising,” said a person tracking the space, who did not want to be named.
In the last year or so, a number of publicly listed SaaS companies in the US have seen their valuation multiples jump from 10 times of revenue, which used to be the norm earlier, to 20-30 times of revenue. The successful IPO of software service firms such as Slack, Zoom, and more recently Snowflake, and the fact that they are showing a high rate of growth even as mature firms, is driving valuation multiples higher, investors say.
“SoftBank India has been evaluating the space for a while, and SaaS or even business-to-business is a sector they haven’t invested in so far,” said another investor aware of plans, requesting anonymity.
After doing no fresh deals in India for a year, Masayoshi Son-led SoftBank seems to be closing more deals actively. Last month it led a $150 million round in online learning firm Unacademy, nearly tripling its valuation to $1.45 billion in barely six months.
While SoftBank is technically investing from its second Vision Fund-touted to be the world’s largest private investment fund- it is money from SoftBank’s own balance sheet that has been structured into a fund, sources said. SoftBank's plans to raise a second mega fund from external backers was marred last year by a number of loss-making firms whose valuation had to be cut, led by co-working upstart WeWork, whose proposed Initial Public Offering (IPO) came unstuck.
SoftBank’s current portfolio in India includes ride hailing firm Ola, hotelier Oyo, financial services firm Paytm, insurance aggregator Policybazaar and eyewear retailer Lenskart, among others.
2020 is also turning out to be a busy year for SaaS startups, which have rapidly raised funds at increasingly higher valuations during the pandemic. API startup Postman’s valuation rose from $350 million last year to $2 billion this year, while Freshworks was valued at $3.5 billion and has raised over $200 million this year.
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