Sridhar Vembu is the original startup champion who built a multi-million dollar, global software services company from scratch without any VC money. Zoho Corp, started in Chennai but now headquartered in San Francisco and still self-funded, is one of the early companies that rode the SaaS (software as a service) wave. Twenty years after he founded Zoho, Vembu has started investing in other startups, focusing on research and development-oriented companies in the semiconductor and medical devices space.
What is your assessment of the startup ecosystem in India?
SaaS as a space is crowded with a lot of players who are not making money. The industry is dotted with unviable business models sustained by repeated infusions of VC funding. The money is starting to run out. In San Francisco, the mood is sceptical rather than optimistic — which company will be the next to roll down its shutters, not which company is raising funds. For economic and fundamental reasons, the natural next step is rationalisation and consolidation. Today, most startups are running out of money because they are spending only on marketing and acquiring customers. In due course of time, you will see players become more like us. We did it through internal development, others will use the consolidation route. When the fund well dries up, things will change. In SaaS, I have founders who approach me when their business is failing and they want to know if they should sell or pivot. This is an overcrowded market segment. The chances of success are higher when you have a differentiated product. There is a wave of VCs funding SaaS companies, but not durable companies. That’s the wave I would like to see.
Do you invest in startups? What is your role in the startup ..
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