Local SaaS firms under the thumb to retool for artificial intelligence
At least half a dozen investors ET spoke to said it will be crucial for early-stage software companies to showcase how they are leveraging AI in their products to attract new investments in 2024.
Elevate Your Tech Prowess with High-Value Skill Courses
Offering CollegeCourseWebsiteIIM KozhikodeIIMK Senior Management ProgrammeVisitIIT DelhiIITD Certificate Programme in Data Science & Machine LearningVisitIndian School of BusinessISB Professional Certificate in Product ManagementVisit“We are at a point in SaaS where we will see ‘mass retooling’ of companies in 2024. Category after category, companies will figure out how to leverage AI with the intent to make their products 10x better,” said Rajan Anandan, managing director of Peak XV Partners (formerly Sequoia Capital India & Southeast Asia) & Surge.
“An early stage SaaS company today needs to be leveraging AI in a fundamental way to build; otherwise, others could enter their space with a 10x better product,” he said.
This comes at a time when the domestic software-as-a-service (SaaS) market is already facing the brunt of macroeconomic headwinds, industry watchers said, citing that revenue multiples for valuations have been adjusted, bar for early stage investments is going up, and clients continue to reduce software spends to keep costs under check.
Also read | The AI-ceberg of innovations: Meet AI-first startups shaping India's tech future
Further, lack of domestic AI talent and expensive open models are making it a capital-intensive investment for local SaaS players, especially at a time when capital is hard to come by, they said.
Investors and operators now expect 2024 to usher in strong consolidation as venture backers focus on innovation brought through AI at
