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Why are Microsoft and Warburg Pincus wooing BrowserStack

Software maker Microsoft, which signed a business part which signed a business partnership with BrowserStack in March, has also offered to invest around $40 million in the company at a valuation of $400-500 million over the past few months, said two of the sources cited above.

Updated: May 23, 2017, 08.13 AM IST
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BrowserStack's annual recurring revenue is estimated to be about $40 million to $50 million, with about 76,000 paying customers including companies like Adobe, Microsoft, Twitter, AirBnB, Spotify and Amazon.
BrowserStack's annual recurring revenue is estimated to be about $40 million to $50 million, with about 76,000 paying customers including companies like Adobe, Microsoft, Twitter, AirBnB, Spotify and Amazon.
BENGALURU: Web-testing platform BrowserStack is being wooed by a slew of investors -strategic and financial -as they hunt for the next big winner in a sector, which combines rapid business growth with steady profits and offers a stark contrast to cash guzzling consumer internet startups that have dominated the funding cycle in recent times.

Mumbai-based BrowserStack, a bootstrapped venture -a term that denotes a company which has not raised any institutional funding -has received interest from marque venture funds including Sequoia Capital and Warburg Pincus, according to three people aware of the development.

Software maker Microsoft, which signed a business part which signed a business partnership with BrowserStack in March, has also offered to invest around $40 million in the company at a valuation of $400-500 million over the past few months, said two of the sources cited above. "But the company is holding out for a (higher) valuation," the sources said, adding that it is looking for a $800million to $1-billion valuation. Microsoft and Warburg Pincus did not reply to email queries from ET. Sequoia Capital responded saying, "this information is incorrect".

Founded by IIT-Bombay batchmates -Ritesh Arora and Nakul Aggarwal -in 2011, BrowserStack is the fourth venture for the duo, and the first to succeed. The company helps developers visualise what their code will look like and how it will perform across browsers and operating systems. A code has to work across multiple browsers -Windows' Internet Explorer, Apple's Safari and Google's Chrome. Each browser has its nuances and the behaviour of codes varies on different platforms.

Arora, 33, did not confirm the investment talks but said his company interacts with venture capital firms on a regular basis to explore choices.

"I've known the Sequoia folks for four years now and Warburg for over a year. We speak to a lot of VCs but there's nothing substantial that has developed in terms of funding," he said.

Arora, 33, who along with Aggarwal was a winner of the inaugural ET Startup Awards in the Bootstrap Champ category in 2015, told ET that, "we have been open to the option of fundraising, we don't have a timeline though and haven't decided on how much to raise. It's very open-ended at the moment."

BrowserStack's annual recurring revenue is estimated to be about $40 million to $50 million, with about 76,000 paying customers including companies like Adobe, Microsoft, Twitter, AirBnB, Spotify and Amazon.

Why are Microsoft and Warburg Pincus wooing BrowserStackFor investors, the Indian enterprise SaaS space is attractive as companies offer competitive pricing and requires less upfront investment. What's more, with global giants including, Apple, Intel and Nutanix shopping for such startups, the chances of exits are also bright. So far, 67 SaaS startups have received funding this year.

Freshdesk, one of India's best known product software makers, was valued at about $700 million when it raised a round led by Sequoia Capital in November and is estimated to have an annual revenue run rate of $60-70 million. Other bootstrapped Indian SaaS startups include Zoho, which competes globally with the likes of Salesforce and Microsoft, Delhi-based web-testing platform Wingify, hospitality SaaS provider Rategain and FusionCharts, a data visualisation company that has over 25,000 consumers across 118 countries.

"From a company's perspective, if there is good customer traction and the numbers look good, there is no harm in raising external funding, as long as there is a vision for what the money is going to be used for," said Naganand Doraswamy, founder of IdeaSpring Capital.

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