Inside IPO-Bound Fractal’s 25-Year-Journey From SaaS Startup To AI Powerhouse

Rome was not built in a day. This idiom is vital in understanding the journey of Fractal Analytics from the early days to its current avatar. What began as a bold idea by two IIM Ahmedabad graduates has, over 25 years, evolved into a global AI powerhouse.

It was the year 2000 when Srikanth Velamakanni and Pranay Agrawal decided to launch Fractal Analytics to solve core business challenges using behavioural and predictive analytics. 

Today, the Mumbai-based unicorn is not only profitable but is all set for a public listing, but along the way, it has also played a vital role in incubating and scaling up startups that are set to revitalise traditional sectors with AI. 

For instance, healthcare AI startup Qure AI was incubated within Fractal by founder Prashant Warier. Besides this, Fractal acquired and scaled up conversational AI platform Senseforth AI, and in 2023, the company launched FlyFish to tap the agentic AI opportunity.

That’s today. But let’s step back and understand what Fractal set out to do 25 years ago. It wanted to help enterprises answer critical questions. For instance, how do Indian banks acquire customers for credit cards, and what kind of banking products are the best fit for certain target groups? How do consumer brands forecast demands based on existing customer data?

Even early on, the likes of HDFC Bank, Hindustan Unilever, and Visa adopted Fractal’s SaaS suite, and today, the company lays claim to over 170 enterprise customers across 18 countries.

“When we started, the idea was to explore ways of using mathematics to help businesses perform better. And our core objective has not changed over time,” cofounder and CEO Agrawal told Inc42. 

According to the CEO, the idea was to help power human decisions in enterprises to deliver better outcomes for every stakeholder. Of course, enterprise technology and software has evolved significantly over time, so the Fractal journey is as much about adaptability as it is about innovation. 

Fractal’s Evolution On The Spectrum Of AI

25 years is an eternity in tech. Naturally, Fractal has witnessed the entire spectrum of AI evolution in that time. It started with traditional statistical models, transitioned to traditional machine learning and AI algorithms around 2010 to the agentic AI models of today. 

Over the years, Fractal has raised more than $800 Mn across multiple rounds and is backed by investors such as TA Associates, Khazanah Nasional, Apax Partners, TPG Capital Asia, Gaja Capital, among others. Most recently, the company raised $170 Mn through a secondary share sale at a valuation of $2.4 Bn.

The idea remains the same — deliver better outcomes for enterprises, but the mechanism has evolved. “We were never under any illusion that we don’t have to keep evolving,” said Agrawal. 

Indeed, traditional SaaS players are finding it hard in 2025 to adapt to the latest AI models and agents. With the AI landscape evolving rapidly, the question of product-market fit is changing by the month in many cases. As large language models and agentic platforms improve, the likes of Fractal have no choice but to remain on the bleeding edge.  

Fractal’s adeptness at adapting is evident from its growth. 

In FY19, well before the entire GenAI and agentic AI wave started, Fractal’s revenue stood at INR 625 Cr. Though it was still in the red, the company’s traction was growing rapidly, especially as AI product development was in full swing. 

By FY23, Fractal had touched profitability with a revenue base of INR 1,985.4 Cr. As of FY25, Fractal’s operating revenue stood at INR 2,765.4 Cr, with a healthy profit of INR 220 Cr.

How Global Crises Shaped Fractal

While there have been years when the company slipped into losses, it has never witnessed a decline in revenue. Some of that could be attributed to the company’s acquisition and incubation strategy, as hinted earlier, but the past 25 years were not without challenges.  

Just to recap some of these, there was the dotcom bubble burst in the early 2000s, and then the 2008 global financial crisis as well as Covid-19 slowdown. Some might say that the global economy is still recovering from some of these challenges, but Fractal has remained steadfast to its mission of growing frugally. 

“Though we were only about $5 Mn or $6 Mn in revenue at that point, we could not see any growth for almost 12 to 18 months, which did become a very big problem for us,” the CEO recalled.

Agrawal believes that enterprise problems have fundamentally remained the same. “We kept building our business and transitioning as per the needs of the hour, based on five aspects that every business looks for: building and bringing better products to the market faster, better customer engagement, operational efficiency, being future-ready for any kind of technology-led disruptions, and access to real-time data and insights.”

In 2000, the startup began its journey as an analytics SaaS business in the BFSI and consumer goods segment. Till 2010, Fractal used various statistical, regression-based models and segmentation-based models to predict. 

Post 2010, machine learning (ML) models and algorithms began to take off and Fractal latched on to this opportunity. Deep learning was witnessing a revolution thanks to the advancement of neural networks and other self-learning models, which became the bedrock for today’s GenAI-dominated landscape.

“In 2014, AI entered in a big way, which brought with it the ability to access and analyse unstructured data, such as text, video, audio, image, etc. We made a big pivot around this time, going AI-first across our business,” Agrawal added.

With the technology evolving, Fractal entered the retail segment as well and forayed into the UK market. It also started building products such as Concordia and Customer Genomics in-house to improve its SaaS offerings.

In 2016, Fractal raised $100 Mn from Khazanah Nasional as it started chalking out plans for acquisitions. In 2018, it acquired behavioural architecture company Final Mile to integrate behavioural science and data science for understanding decision-making and influencing consumer and social behaviour.

Perhaps most importantly, Fractal saw the need to invest in R&D for the future, which proved to be more prescient. By this time, the unicorn was investing 7% of its annual revenue in R&D to build AI and ML models, a decision that would hold Fractal in good stead for the GenAI revolution. Including those of its subsidiaries, Fractal currently has 24 granted patents globally, largely a result of this R&D push. 

Fractal’s AI Product Strategy

This is arguably why Fractal was able to navigate the GenAI movement without too many shocks, unlike many other companies worldwide, many of whom are still struggling to transition. Agrawal believes that the investments in R&D and the incubation mindset enabled Fractal to take full advantage of the opportunity.

The startup has not only invested in more acquisitions, but also launched new products. For instance, Senseforth AI was an automated customer engagement and interaction platform, which it spun off in 2022 to create Flyfish, which is a shopping assistant for ecommerce retailers.

In 2024, Fractal developed a text-to-image diffusion model, Kalaido.ai to take on Open AI’s Dall-E, Stable Diffusion, Midjourney, Gemini Imagen, among others. Kalaido is capable of generating images from text prompts in English and 17 Indian languages.

Fractal also launched an AI-powered virtual business coach called MarshallGoldsmith.ai built on top of GPT 3.5 as well as vaidya.ai, a healthcare AI platform to provide free and accessible healthcare assistance to individuals. 

Most recently, the company has also launched an Agentic AI platform called Cogentiq to help Fortune 500 enterprises with agentic solutions across healthcare, insurance, and consumer packaged goods.

There’s a clear pattern in Fractal’s strategy — enhance traditional SaaS solutions with AI in tandem with the evolving landscape. 

“Both AI technology and the compute part have evolved significantly now. The quantum of data that we are able to store, collect, store, and process today, and the speed at which we are able to do it, was very different 20-30 years back. This has been a huge help for our business. Besides, the fact that we started building our products is also becoming our growth driver,” Agrawal added. 

For instance, its wholly-owned subsidiaries, Senseforth AI, had a turnover of INR 93.8 Lakh in FY25, and Eugenie.ai clocked more than INR 74 Lakh turnover. Its partially-owned subsidiary, Analytics Vidhya, clocked INR 22.2 Cr turnover in the last fiscal.

But, as of today, a majority of its revenue comes from the core business, US-registered Fractal Analytics Inc. and Singapore-registered Fractal Private Limited. The founder also said that currently, consumer packaged goods and retail industry (CPGR) and technology, media, and telecommunications (TMT) sectors contribute the biggest percentage (69.2%) to Fractal’s revenue, but he sees tremendous growth opportunities in other sectors too in the years to come.

Having said that, the company sees immense potential for growth in the above subsidiaries and products that it has developed over the years. 

What’s Next For Fractal?

With the IPO process currently underway, Fractal declined to share much about its future-looking strategies, including revenue and profitability outlook.

The CEO did not share a tentative timeline for the company’s IPO. However, other sources close to the company told Inc42 that Fractal is expected to file its draft red herring prospectus (DRHP) in August. The issue size is expected to be in the range of $400-$500 Mn, valuing the company at $3 Bn.

“Being public at this point is just the right thing to do from the standpoint of institutionalising the company, building an institution that lasts for the next 100 years,” said Agrawal.

Meanwhile, the CEO has acknowledged that there is a dearth of talent in the ecosystem. “GenAI is two-three years old, Agentic AI is even less than that. The whole field of AI and data is hardly about 10-15 years old. So, talent is a challenge from a growth perspective.”

But, on the other hand, business needs are also evolving, he said, which is why Fractal has to keep creating value for its customers in new ways with AI and other emerging technologies.

Agrawal said that earlier, enterprises looked for models that were services-based, and they had the patience to wait for new tech, but that’s changed now. Now companies need to show speed in adopting new tech. This is where Fractal’s Agentic AI route is expected to address some of the pain points, especially in terms of the productisation of services. 

Meanwhile, acquisitions are a key part of Fractal’s playbook, which will steadily continue as the company keeps growing.

Although India is home to the majority of Fractal’s talent – with nearly 4,500 of its 5,000 employees based here – the country accounts for around 8% of the company’s overall revenue, even when factoring in global capability centres (GCCs) of large enterprises.

According to the CEO, while there’s no shortage of conversations around AI adoption in Indian boardrooms, what’s missing is execution at scale. “Appointing a chief data officer or chief AI officer isn’t enough,” he said. “True transformation requires AI to be deeply embedded at the core of every workflow.”

But it goes without saying that AI adoption is becoming a key competitive edge, and every company has to follow the rules of this game, which once again brings us to the debate: will AI kill SaaS? 

The answer may lie in the ability of the SaaS companies to adapt in time. Fractal’s early AI-first approach and long-term R&D investments are certainly strengths amid this disruption. However, new-age companies are emerging fast, solving many vertical-focussed challenges. 

Agrawal believes that building in-house AI models and products will continue to give Fractal an edge even as many other solutions emerge. Besides, the company’s acquisition strategy is also something that will come into play post the IPO. 

At the moment, Fractal appears well-prepared to navigate the shifting tides of enterprise technology even as it looks ahead to the IPO. At the cusp of its next big leap, a public listing, will Fractal be the Indian SaaS company to emulate for others? 

[Edited by Nikhil Subramaniam]