India’s burgeoning unicorn club has a new member: Freshworks. The global leader in customer engagement software announced yesterday that it has secured $100 million (around Rs 685 crore) in its latest funding round, which values the company at about $1.5 billion. The Series G round was co-led by Accel Partners and Sequoia Capital, with participation from Alphabet’s CapitalG, formerly Google Capital. Significantly, Chennai-based Freshworks is one of the first pure-play India-based Software-as-a-Service (SaaS) companies to bag the unicorn tag.
“When we started Freshworks in 2010, we were a single-product company with a goal of offering better, easier-to-use customer service software than what was in the market. We’ve since scaled our company to $100M in annual recurring revenue and built a full SaaS platform where all of our products work together seamlessly, without requiring additional integration resources or consultants to make the software simply work,” Girish Mathrubootham, the co-founder and CEO of Freshworks, said in a statement.
According to the company, the latest cash infusion will be used to further expand its global footprint and continue investment in its integrated SaaS platform. “Being a SaaS company, geography has never been a limiting factor. At this time, we are expanding in the US, Australia and New Zealand, EMEA, APAC and Europe markets,” Mathrubootham told The Economic Times.
Citing industry sources, the daily added that this round is likely to be Freshworks’ last private raise before a potential public listing. The company has so far picked up nearly $250 million in investor funding.
In another announcement made yesterday, Freshworks said that it has hired Suresh Seshadri, former AppDynamics Vice President of Finance & Treasury, as its chief financial officer. Seshadri had helped AppDynamics prepare for its IPO before the company was acquired by Cisco in 2017.
“With the addition of Suresh leading our financial management and strategy toward a path of free cash flow break-even and our latest – and likely last – private funding round in place, we believe we have a unique opportunity to attract customers from around the globe who have been let down by legacy solutions,” said Mathrubootham, adding, “We will eventually need [Seshadri’s] expertise in IPO processes when we do go public”.
The nearly eight-year-old company boasts more than 150,000 businesses and organisations as clients worldwide, including Honda, Rightmove, Hugo Boss, NHS, Toshiba and Cisco. The company previously told the daily that close to 36 per cent of its revenues come from its larger customers while the remaining come from small and medium businesses.
“Sequoia first backed Freshworks in 2016 and didn’t hesitate for a moment to double down on the investment,” Mohit Bhatnagar, the managing director of Sequoia Capital India Advisors, said in a statement. “Girish and his team have worked relentlessly to build Freshworks into a leading SaaS company from India – one that is truly global with customers across 126 countries,” he added.
The report added that Freshworks crossed the $100-million mark in annual recurring revenue in June, helped by growth in the company’s flagship customer support product – Freshdesk – and the growing revenues of its IT services management product, Freshservice, as well as its customer relationship management product, Freshsales.
Since its previous funding round, Freshworks has made several technology acquisitions to bolster its product offerings. Several of these technologies were featured in its recently announced cloud bundle, Freshworks 360, which brings together sales, marketing and support applications to provide users with a full, easy-to-use customer engagement experience.
While Mathrubootham is underplaying his achievement saying “This [the unicorn status] does not change the way we look at ourselves in any way”, there is no denying the fact that Freshworks is a flag bearer. However, as Klaas Oskam, managing director of DCS Advisory, pointed out to the daily, a broader group of India-based SaaS companies are now starting to see meaningful scale.
Consider Capillary Technologies, for instance. The cloud-based software solutions company has reportedly raised around $20 million over the past year. Then there is Chennai-based Chargebee, another company in the SaaS space, which recently secured $18.5 million in a Series-C round from New York-based Insight Venture Partners. Mumbai and US-based web testing platform BrowserStack also closed $50 million in a Series-A round from Accel Partners earlier this year.
Meanwhile, the unicorn club is getting pretty crowded of late, with Swiggy, Byju’s, Policybazaar, Paytm Mall and now Freshworks all joining it in quick succession. The daily reports that at least seven more companies are poised to gain the coveted title this year, doubling size of the desi unicorn club to about 20 members in the bargain.