INTERVIEW: India’s latest software unicorn is wetting its feet in America after holding its horses for seven years

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INTERVIEW: India’s latest software unicorn is wetting its feet in America after holding its horses for seven years
Darwinbox
  • Darwinbox made its entry into the unicorn club after raising $72 million in a round led by TCV.
  • The company builds cloud-based human resources softwares that are used by giants like Adani Walmart, Tata and others.
  • It has taken Darwinbox seven years to look towards the US whereas for most software companies, the US is their biggest market right from the beginning.
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India’s latest software-as-a-service (SaaS) unicorn DarwinBox has started to test the waters in the USA and expects to clock a revenue of $10 million from America in the next two years. A unicorn, in startup parlance, is a private firm valued at or more than $1 billion.

The odd bit is that it has taken Darwinbox seven years to look towards the US whereas for most software companies, the US is their biggest market right from the beginning. Market leaders like Freshworks, BrowserStack, Postman, Zenoti and others — usually focus on the American market as it houses all their target customers.

The combined revenue of all SaaS companies in the US is $57 billion (2020). "It is a much larger market and much more competitive market, so we probably have to find our niche to enter the market with," Darwinbox’s Founder Rohit Chennamaneni told Business Insider.

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Ankur Bansal, co-founder of BlackSoil Capital, in a previous conversation with Business Insider, had highlighted that SaaS business margins are really high and they are even higher from customers based out of the US or Europe. This, in turn, also increases their valuation in the eyes of the investors significantly.

However, the HR solutions provider was able to resist the lure for seven years so far. "We want to be the number one player in Asia, this is more of a long-term horizon thing. But because we are already getting some traction there [USA] that is why we want to launch there," Chennamaneni added.

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So what changed now?

Currently, 60% of its revenue comes from India, nearly 33% from Southeast Asia and nearly 7-8% from the Middle East. "We have always sold to Asian headquartered companies that have offices in the US. Now, as an opportunity we can go and sell to US-based companies, which have a strong Asia presence. It will just change the number of companies I call to sell to, as a product we are ready,” Chennamaneni said.

Darwinbox — that builds cloud-based human resources softwares — believes that there are three aspects that may work in their favour.

First, the investments they have raised from US-based Salesforce, one of the most valuable brands in the world. Second, being featured on market research report ‘Gartner Magic Quadrant 2021’, which has increased the company’s inbound inquiries. Third, its existing clientele in Asia who already have offices in the US.

The company has over 650 clients, namely Mcure, Adani Walmart, Tata, Paytm, BigBasket, Cred and others. Some of these also have offices in the US.

What’s the action plan?
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The company has decided to spend the next two years building a strong foundation. It will start off with a short pilot programme in the world’s biggest SaaS market with five undisclosed companies and look to expand its offering to 30 players.

DarwinBox is looking to hire two sales people, who will work with the company’s founder Chennamaneni directly, to get more understanding on the needs of the market and create a unique preposition for the customers.

The company will be competing with SAP SuccessFactors, Workday Human Capital Management, Ceridian Dayforce, Workforce Now and others in the US market.

Darwinbox hopes to lead Asian market

Darwinbox has been following a different trajectory so far. The company started in India, expanded in India and then expanded in the Southeast Asian and Middle Eastern markets, before making any progress towards the United States.
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The company does agree that the American market has the potential to be its largest market and make a majority of its revenue, if approached correctly, Chennamaneni said.

Darwinbox is looking to further scaling its product offerings to provide better employee experience. The company plans to make its conversational bot advances by enabling it to have more personal conversations. The existing chat bot "eases the life of the person, what we are focusing on is user experiences. How the person is feeling, how engaged the person is, etc.," Chennamaneni added.

The company raised $72 million recently, at a unicorn valuation, to fund these ambitions. It has previously raised $15 million from Salesforce in January 2021.

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