“Over the next 3-5 years we want to be ready with respect to becoming a public company,” Krish Subramanian, cofounder and CEO of the Tiger Global-backed company, told ET in an interview. “That requires a lot of internal maturity.”
Subramanian is one of the four cofounders of the San-Francisco headquartered company which belongs in the crop of VC-backed decade-old Indian-origin SaaS companies hitting key revenue and market milestones globally.
In September last year, the San Mateo-headquartered Freshworks, founded in Chennai like Chargebee, had made a Nasdaq listing at a $13-billion market valuation at the close of listing day.
Chargebee is setting much store by following the journey of collaboration tools software company Atlassian, which recorded over $2 billion in revenue in 2021.
Subramanian underscored Atlassian’s rigour in building internal stability, business acumen and commitment to data fidelity – following prediction with action on hitting key revenue and market milestones – before it went public seven years ago. “Atlassian said they practised this for 6-8 quarters internally before going public, and that’s what makes them stand out as a company,” he said.
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Chargebee would require at least three years to build a level of “cadence and commitment” to operate as a public company, Subramanian said.
The company has begun on this course, particularly filling leadership positions with executives who have handled compliance requirements of a public company. In November last year, Chargebee hired finance veteran Mike Beach, a public markets CFO who, among other things, took subscription-based edtech platform Blackboard public.
The company has also added depth to its products with acquisitions. Since October 2021, Chargebee has made four acquisitions to bolster its product framework: Ajira for key product capabilities in entitlements, ecommerce and payments; revenue recognition platform Revlock for accelerating automation in billing; Brightback for customer retention; and startup numberz to launch its receivables process.
As part of market expansion, Chargebee, which has over 93% of its market between North America (Canada and the US), and European nations, is entering the Indian market in a partnership with the Bengaluru-headquartered Razorpay.
Addressable market size for the Chargebee-Razorpay partnership is estimated between $600 million and $1 billion and is growing at a fast clip, given the adoption of SaaS by a diverse range of industries from manufacturing to IT to retail, said Subramanian.
“The subscription and SaaS ecosystem is maturing fast. In terms of cumulative revenue of SaaS companies from the India market is $30 billion; pure-play India SaaS market is $2.5 billion, which is one percent of the global market, and that is tipped to increase too,” he said.
Chargebee raised $250 million in February this year in a round led by Tiger Global and Sequoia, valuing the company at $3.5 billion. The company employs over 500 people working from global offices across 21 time zones. The company, which does not disclose key SaaS metrics such as annual recurring revenue, has been aggressively hiring across key regions in Europe and North America.
Sharad Sharma, software product evangelist and co-founder of the iSPIRT Foundation, said it has become clear now that India’s mid-market SaaS model marked by desk sales and marketing – meaning a thin field sales force – has come to age. Hundreds of Indian-origin SaaS companies have adopted it.
Many of these SaaS startups will succeed. What is not clear is which of these companies will be long-term winners, he said. “This dynamic plays out in every industry. We know EV scooters will succeed, but we don’t know if Ola Electric will be the long-term winner.”