Industries · Technology and SaaS
In software deals, buyers and investors look hard at revenue quality, code and data.
Technology deals in India range from a Pune SaaS founder raising a Series A to a services firm selling to a larger IT company. The assets are people, code, customer contracts and data, and none of them sit in a warehouse. Diligence asks whether the revenue repeats, whether the company really owns its code, and how it handles its customers' data.
Deal patterns
How deals usually look in technology and SaaS.
The four shapes a transaction most often takes in this sector, and what each one turns on.
- A venture roundA seed or Series A investment, with a term sheet, a short diligence and a shareholders' agreement that shapes every later round.
- Acqui-hire or product acquisitionA larger company buys a small team or a product, often paying partly over time if the founders stay.
- Services firm saleAn IT services or consulting firm sells to a larger player for its clients, its people or a capability.
- Secondary sale by early holdersEarly angels or employees sell shares to a new investor. Pricing and paperwork still need care.
Diligence focus
Where the questions will come from.
Expect a buyer or investor to spend most of their diligence time on these areas. Preparing them first shortens the process.
Revenue quality
Recurring versus one time revenue, churn, discounts, and how much depends on a few logos. Monthly figures matter more than the annual total.
IP ownership
Whether every founder, employee and contractor has assigned their work to the company, and what open source licences the code uses.
Customer contracts
Assignment and change of control clauses, liability caps, data processing terms and any promises about uptime or support.
Data protection
What personal data the product holds, where it is stored, and how the company meets its duties under the DPDP Act.
Cap table and past rounds
Every allotment, transfer and convertible note documented, with the filings and valuation reports behind them.
Key people
Who holds the knowledge, what their contracts and ESOPs say, and what happens to them in a sale.
Each area gets its own folder, with access by role
Approvals and regulators
Who else may need to say yes.
Which approvals apply depends on the business, the structure and the state. Confirm them with your CA and lawyer before you set a timeline.
| Approval or regulator |
|---|
| Foreign exchange rules under FEMA and the reporting that goes with foreign investment |
| Income Tax rules on the value at which shares are issued |
| The DPDP Act, 2023 for personal data in the product and in diligence |
| Sector rules passed down by customers, for example banking or insurance outsourcing guidelines |
| Registrar of Companies filings for every allotment and transfer |
An example
One deal, from approach to the first hundred days.
Case file · Technology and SaaS
- Sector
- Technology and SaaS
- Run on
- Due diligence, Deal pipeline, Security and access
Illustrative example with sample details.
A Pune SaaS company prepares for a Series A
A Pune company selling inventory software to distributors is talking to two funds. Before the first term sheet arrives, the founder opens a data room on Synerger and fills it against a standard request list: monthly recurring revenue by customer, the cap table with every allotment, IP assignment letters, and the top twenty customer contracts. The CA reconciles revenue to GST returns and bank statements. Gaps show up early: two early contractors never signed IP assignments, and one large customer contract has a change of control clause. Both are fixed before investors ask.
The target moves across the pipeline under a code name
Questions
About technology and SaaS deals
What do Series A investors usually ask for first?
Monthly revenue by customer, the cap table, the last two years of accounts and the main customer contracts. A clean, dated data room makes the round faster.
Is open source a problem in diligence?
Usually not, but some licences carry obligations if you distribute the code. Keep a list of components and licences, and fix anything your lawyer flags.
Should we use Synerger for one round?
It helps most when several investors and advisers are asking questions at once. If you expect more rounds, the data room becomes the base for the next one.
Further reading
Platform parts and guides for this sector.
- Due diligencePlatformRequest lists, a data room and questions in one place, with a record of who did what.
- Fundraising readiness before a Series AGuideSeries A investors look harder than seed investors did. A founder in India should put the numbers, cap table, legal records and data room in order three to six months before raising.
- What a quality of earnings review looks atGuideBuyers rarely accept reported profit as it stands. A quality of earnings review adjusts it for one time items, owner costs and accounting choices, and checks it against cash. A seller can prepare the same schedules in advance.
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