Investments by private equity (PE) firms in India’s enterprise software-as-a-service (SaaS) companies increased to $1.38 billion in the first seven months of 2025 compared to $833 million in the entire 2024, according to data from Venture Intelligence.
It comes on the back of the maturing SaaS ecosystem, which is profitable and has annual recurring revenue in millions, making these companies ripe for PE investments, investors told ET.
Average PE investments in top SaaS companies surged to $239 million from $96 million in 2024, according to the report.
A large portion of these investments went into startups in the enterprise software and healthcare sectors such as Impetus Technologies, Innovaccer, WhatFix and Capillary Technologies, which have repeatable playbooks and are less risky as per investors.
Sanjay Nath, cofounder and managing partner of Blume Ventures, said that an increasing number of PE players reached out to the firm for potential SaaS and artificial intelligence (AI) investments and that some financing rounds are underway.
An investment banker said on condition of anonymity that discussions are in progress with PE players for three potential SaaS acquisitions and investments.
Ripe for investments
Naresh Patwari, founder and managing partner of Jashvik Capital, a private equity player focused on mid-market business, said SaaS is a great business to own since once you sell a subscription customers keep paying you for a long time. “It is a perpetual business,” he said.
The company had earlier announced a Rs 400 crore investment in healthcare enterprise resource planning (ERP) solutions company Marg ERP.
Another private equity investor said the biggest challenge with enterprise SaaS has been availability. “The market needs to evolve and mature, where these companies can reach a certain scale and quality. This is what is happening now,” said the person, who did not wish to be identified.
Gaurav Chaturvedi, general partner, Kae Capital said that in the past few years, SaaS companies in India have reached significant scale and are profitable, a sweet spot for PE investors.
As of 2023, India had more than 1,000 SaaS companies with over 150 firms with annual revenues of more than $1 million, according to data from India Equity Brand Foundation. The revenue from the SaaS sector is expected to reach $62.93 billion by 2032, a compound annual growth rate of 27.3%.
Nishit Garg, partner, RTP Global Asia investment team, said it is also about the return profiles that PE investors are looking for compared to venture capital (VC) firms. “What PEs are looking for is whether this asset can give a certain amount of return in the next five years with a much higher predictability, compared to VCs, who look at whether an investment can generate outsize multiples in a 10-12 years’ time frame,” he said.
The increase in PE investments comes at a time when technological shift is upending the SaaS industry, impacting its business models. AI is set to impact the business, according to most investors, as well as create more opportunities.
SaaS in the time of AI
An investment banker said AI might adversely impact investments and lower interest in enterprise SaaS companies, but other disagreed.
Patwari of Jashvik Capital said that from an AI perspective, SaaS does get affected to the extent that the cost of developing a product will go down. “That just reduces the cost of building products and improvements. So, actually, profit pools can expand in the industry. At the same time, customers are going to demand more product innovations because they're easier to deliver. I think it would be exciting going forward, if you are prepared to respond to opportunities that are there in the market,” he said.
RTP Global’s Garg said that these changes are part and parcel of the business and a great team will figure it out. “More than being a challenge it is just helping out people build and reach scale faster in a much more leaner way. After a certain scale, if they have repeatable playbooks they start becoming a good target for PE players,” he said.
Also Read: India’s SaaS sector tops $15 billion in revenue as IPO pipeline builds
Add Now!
It comes on the back of the maturing SaaS ecosystem, which is profitable and has annual recurring revenue in millions, making these companies ripe for PE investments, investors told ET.
Average PE investments in top SaaS companies surged to $239 million from $96 million in 2024, according to the report.
A large portion of these investments went into startups in the enterprise software and healthcare sectors such as Impetus Technologies, Innovaccer, WhatFix and Capillary Technologies, which have repeatable playbooks and are less risky as per investors.
Sanjay Nath, cofounder and managing partner of Blume Ventures, said that an increasing number of PE players reached out to the firm for potential SaaS and artificial intelligence (AI) investments and that some financing rounds are underway.
An investment banker said on condition of anonymity that discussions are in progress with PE players for three potential SaaS acquisitions and investments.
Ripe for investments
Naresh Patwari, founder and managing partner of Jashvik Capital, a private equity player focused on mid-market business, said SaaS is a great business to own since once you sell a subscription customers keep paying you for a long time. “It is a perpetual business,” he said.
The company had earlier announced a Rs 400 crore investment in healthcare enterprise resource planning (ERP) solutions company Marg ERP.
Another private equity investor said the biggest challenge with enterprise SaaS has been availability. “The market needs to evolve and mature, where these companies can reach a certain scale and quality. This is what is happening now,” said the person, who did not wish to be identified.
Gaurav Chaturvedi, general partner, Kae Capital said that in the past few years, SaaS companies in India have reached significant scale and are profitable, a sweet spot for PE investors.
As of 2023, India had more than 1,000 SaaS companies with over 150 firms with annual revenues of more than $1 million, according to data from India Equity Brand Foundation. The revenue from the SaaS sector is expected to reach $62.93 billion by 2032, a compound annual growth rate of 27.3%.
Nishit Garg, partner, RTP Global Asia investment team, said it is also about the return profiles that PE investors are looking for compared to venture capital (VC) firms. “What PEs are looking for is whether this asset can give a certain amount of return in the next five years with a much higher predictability, compared to VCs, who look at whether an investment can generate outsize multiples in a 10-12 years’ time frame,” he said.
The increase in PE investments comes at a time when technological shift is upending the SaaS industry, impacting its business models. AI is set to impact the business, according to most investors, as well as create more opportunities.
SaaS in the time of AI
An investment banker said AI might adversely impact investments and lower interest in enterprise SaaS companies, but other disagreed.
Patwari of Jashvik Capital said that from an AI perspective, SaaS does get affected to the extent that the cost of developing a product will go down. “That just reduces the cost of building products and improvements. So, actually, profit pools can expand in the industry. At the same time, customers are going to demand more product innovations because they're easier to deliver. I think it would be exciting going forward, if you are prepared to respond to opportunities that are there in the market,” he said.
RTP Global’s Garg said that these changes are part and parcel of the business and a great team will figure it out. “More than being a challenge it is just helping out people build and reach scale faster in a much more leaner way. After a certain scale, if they have repeatable playbooks they start becoming a good target for PE players,” he said.
Also Read: India’s SaaS sector tops $15 billion in revenue as IPO pipeline builds
Add 
as a Reliable and Trusted News Source
as a Reliable and Trusted News Source Add Now!