The Postman story: Kyuki SaaS bhi kabhi product tha
Startup
Postman’s recent valuation turned a lot of heads in the last few days. As we dive in to answer whether or not this valuation is justified, let’s back up a little and understand about Software-as-a-Service aka ‘SaaS’.
SaaS, ever since its debut in the early 2000s, has been a dominant category of cloud computing. Despite being one of the most booming startup segments in India, it has stayed surrounded by a lot of ambiguity.
Understanding SaaS
Cloud computing services are divided into 3 main categories: Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS), and Software-as-a-Service (SaaS).
Simplistically, SaaS is identified as a distribution model that delivers software applications over the internet for a subscription fee. This model has proved to be so lucrative that, once determined sustainable, almost all big software enterprises offer a ‘SaaS Solution’.
The Indian SaaS sector
The Indian SaaS sector is booming, and thanks to the sudden digitization, it has seen some excellent milestones. According to a report by Bain & Co., the number of Indian SaaS companies has doubled over the past 5 years. Moreover, it has seen a 10x surge in capital investment from global venture capitalists in the last 10 years.
The current industry constitutes around 8,000 Indian SaaS companies, carrying a total investment of around USD 6 billion. If we talk purely about the elite, 10 out of the 51 unicorns in India, belong to SaaS space, commanding a cumulative valuation of USD 24.8 billion.
What is Postman?
Postman is a user-friendly Application Programming Interface (API) platform that helps developers through the API life-cycle. Precisely put, an API is a software intermediary that allows two applications to “talk” to each other.
Postman's growth spurt
What is perhaps most surprising for Postman is that it has managed to garner a significantly rich valuation (for the second time in a row) in this extremely challenging period, when most of the startups have had to shut their doors. Its valuation has almost tripled since its last funding (in June 2020) and is supposedly almost 100X its annual revenues today.
Postman's fundraise: Justified or just overhyped?
Although Postman’s market potential is undeniable, this steep price just a month after BrowserStack’s USD 4 billion valuation does raise a doubt - are these numbers purely a function of the ongoing market trend?
Fortunately, Postman’s valuation, like any other SaaS platform’s, depends more on the user base and market opportunity, than on prevailing market trends. Postman currently has a user base of 17 million developers spread over 5 million companies (with 98% belonging to the Fortune 500 bracket), and an ARR (Annual Recurring Revenue) of ~ USD 60 million.
Its monopolistic market positioning and a seemingly large repository of ready-to-use public APIs in the environment of growing need, provide it an opportunity to capture a large market share.
What lies ahead?
Owing to the abundance of national talent, Indian SaaS players are set to fulfill about 19% of the global demand by 2025, with an anticipation that the Indian SaaS industry would come to command a trillion dollars by 2030.
Additionally, as more non-technical folks gain comfort with APIs and no-code platforms, it is reasonable to anticipate that this market might just be in the very nascent stages of exponential growth.
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