Tracing Capillary Tech’s Blueprint To D-Street

Bengaluru-based SaaS startup Capillary Technologies is all decked up to make its stock market debut by the end of this week. As of today, November 18, 2025, the last day of its listing, the startup’s IPO was oversubscribed 52X. With this, it is all set to become 2025’s first pure-play SaaS company to walk down the D-Street aisle. 

By the time this piece was published, the stock was trading at INR 606 (with a premium of INR 26) on the grey market, highlighting positive sentiment around SaaS-driven recurring revenue models.

A quick recap: Capillary’s IPO comprised a fresh issue of INR 345 Cr and an offer-for-sale (OFS) component of 92.3 Lakh shares, valued at INR 532.5 Cr at the upper price band of INR 577 per share. The company downsized the IPO just before filing its RHP on November 7, 2025. It had earlier proposed raising INR 430 Cr, along with an OFS of up to 1.83 Cr shares.

In the run-up to its IPO, Capillary raised INR 394 Cr from anchor investors. The startup’s IPO proceeds will largely head toward strengthening cloud infrastructure and accelerating product development. 

Against this backdrop, let’s understand what the company does, what comprises its revenue streams and the potential risks stifling it. 

Unlayering The Capillary Stack Bit By Bit

Founded by Aneesh Reddy in 2008, Capillary Technologies was originally incorporated as Kharagpur Technologies Pvt Ltd. It was only in 2012 that the company was renamed to Capillary Technologies.   

Reddy, an IIT Kharagpur alumnus, built Kharagpur Technologies as a tech-driven customer engagement platform for enterprises. As for the name, our best guess is that IIT Kharagpur probably inspired it. But as times changed, Reddy opted for something sharper for his SaaS company — paving the way for Capillary Technologies.

Since its inception, Capillary has positioned itself as a tool that helps businesses track customer behaviour, enhance retention, and run structured loyalty programmes with measurable impact. 

As the company matured, it expanded into a full-stack SaaS loyalty and engagement provider, integrating multiple products across customer touchpoints in multiple regions. 

Its early client base, such as Blue Label Engage in South Africa and American Express’ US Global Merchant Services Group, strengthened its credibility and supported its international expansion.

Tapping these global clients helped Capillary receive investment from Peak XV Partners (then Sequoia Capital India) and Norwest Venture Partners, among others.

Today, nearly 80% of Capillary’s total INR 481.8 Cr revenue stems from four core solution pillars:

Customer Loyalty Management: An AI-powered loyalty programme platform with personalised journeys, incentives, gamification and reward management. 

Omnichannel Customer Engagement: An AI-driven omnichannel marketing automation tool, with lifecycle management and personalised communication.

Data Analytics And Insights: Retail analytics offering customer segmentation, propensity modelling, next-best actions, and marketing insights.

Reward And Redemption Management: AI-powered rewards platform with curated global rewards and industry-specific integrations. 

Over the years, Capillary has also broadened its product depth and operational scope. While the company initially focussed only on retail, it has since expanded its addressable market by diversifying into sectors like healthcare, BFSI, and telecommunications. With this, it has also deepened its competitive moat in the global SaaS engagement landscape.

Acquisitions Remain Central Growth Engine

While Capillary had been serving global clients since the outset, the real inflexion point came after FY21, when the company decided to expand via acquisitions in the US. 

Until FY20, India accounted for 37.8% of Capillary’s revenue, with the US contributing a modest 5.72%. This equation has flipped since FY21. 

By FY25, North America became its primary market, surpassing India, and contributing 57% of the company’s total revenue. The Asia Pacific region, including India, Southeast Asia and Japan, accounted for 24.1%. Europe, the Middle East, and Africa accounted for the remaining 19% of the company’s total revenue stream 

Capillary’s region-wise revenue split: 

Capillary has remained committed to its inorganic growth strategy in North America. Since 2021, it has acquired four companies in the region. Three of these ventures were acquired to strengthen its customer base in the region. Consequently, its global consumer reach surged to 1.26 Bn in FY25, nearly doubling from 676 Mn in FY20. 

The impact of its acquisition strategy is visible in its financials. Capillary reported an operating revenue of INR 481.1 Cr in FY25, up 207% since FY20. 

These buyouts not only scaled its revenue but also deepened its capabilities, particularly in the rewards and redemption category, which today is one of the fastest-growing revenue streams.

Today, a majority of its Global Fortune 500 clients are based in North America. 

Looking ahead, acquisitions remain integral to Capillary’s growth playbook. The company has explicitly stated in its IPO documents that a portion of the proceeds will be deployed toward future inorganic expansion. 

Cautions Ahead!

While North America has been one of Capillary’s most critical markets, doubling down on the region inherently exposes it to geopolitical uncertainty, regulatory shifts and macroeconomic volatility. With more than half of its revenue now coming from the region, any disruption, whether policy-driven, economic or trade-related, exposes it to several risks.

However, going deeper into North America becomes even more significant when viewed alongside Capillary’s customer concentration risk. In FY25, its top ten customers accounted for 58.71% of total revenue, and four of these key clients are based in the United States.

Beyond these structural risks, customer acquisition remains a major cost centre. If Capillary is unable to acquire new enterprise clients efficiently or deepen engagement within existing accounts, margin pressure could intensify. 

The competitive dynamics of the SaaS and AI markets further demand sustained investment in innovation. Falling behind on automation, analytics, or AI-led engagement capability could weaken its competitive edge. 

Moreover, its acquisition-led scale strategy introduces integration risk, including technology misalignment and cultural incompatibility. Then, its reliance on third-party cloud providers adds operational vulnerability, especially in the event of outages or pricing changes. Besides, the startup’s strong dependence on a few core verticals, retail, healthcare, BFSI and telecom, makes it susceptible to sector-specific downturns. 

Overall, despite a strong product portfolio and a growing global clientele, Capillary needs to navigate its geopolitical footprint quite cautiously. For now, while Capillary has lapped up a blockbuster IPO, can it also deliver an unprecedented listing gain? 

Edited By Shishir Parasher