Deal focus: Darwinbox prioritizes Southeast Asia

Business services account for nearly one-third of the Lightspeed India Partners Advisors portfolio, with half of those companies focused on the US and the rest on Southeast Asia. Dev Khare, a partner with the firm, believes the latter market shows considerable promise – even as conventional wisdom dictates that Indian enterprise software start-ups should target the former.

Human resources software provider Darwinbox is among those leading the charge. The company recently received $15 million in Series B funding led by Sequoia Capital India, with existing investors Lightspeed, Endiya Partners and 3one4 Capital all re-upping. It will put the proceeds towards expanding a Southeast Asia footprint that currently includes Singapore, Malaysia, Indonesia, and Thailand. It is already a dominant player in India’s technology and pharmaceutical verticals.

“More investors are looking at business software companies that sell into Asia. There is increasing demand within the region – the cloud software market in India was worth $4 billion in 2018 and it’s growing 50% year-on-year,” says Khare. “HR and CRM [customer relationship management] are adopted early when companies adopt software. They were the first categories to deliver large software players in the US, with Workday and Salesforce, and we think it will be the same in Asia.”

Darwinbox positions itself as software solution for the entire employee lifecycle, from hiring to retirement. It has some 200 customers with more than 500,000 staff in 50 countries.

InMobi is one of numerous Indian companies expanding in Southeast Asia and using Darwinbox in each new market. However, the start-up is also getting traction with businesses native to the region, leveraging the fact that they have much in common with their Indian brethren. 

“For example, both regions are dominated by conglomerates and conglomerates tend to be more hierarchical in decision making and they tend to move from paper-based and manual systems to automated systems a bit later than younger companies,” says Khare. 

At the same time, success is not a given. Darwinbox is less than four years old and competing for market share with the likes of SAP, Oracle and Workday. It must tailor services to meet the needs of a region that lacks cultural and linguistic homogeneity and has varying levels of technology penetration. But Khare argues that the company has the edge on its better-established global rivals in being able to target areas of rapid growth. 

“The US-based companies operate at the top end of the market and charge a premium for products that in some cases are 20 years old and require massive training sessions before people can use them,” he says. “Darwinbox has pricing that makes sense for the region and a modern architecture. It is as easy to use as Facebook.”   

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• Topics
• South Asia
• Southeast Asia
• Technology
• Early-stage
• India
• Lightspeed Venture Partners
• Sequoia Capital