San Francisco • Freshworks Inc, one of the biggest start-ups to emerge from India, scored a valuation of US$1.5 billion (RM6.11 billion) in a funding round designed to speed global expansion.
Freshworks also hired Suresh Seshadri as CFO, positioning the business software company to go public. He’s got experience. Seshadri prepared AppDynamics for an initial public offering (IPO) last year only to see Cisco Systems Inc acquiring it for a surprise US$3.7 billion just hours before a market debut.
“I like that he had that experience,” said Sameer Gandhi, a partner at existing Freshworks backer Accel. The firm, along with Sequoia and Capital G, Alphabet Inc’s growth fund, invested a new US$100 million in the company. Gandhi said when Freshworks conducts an IPO sometime next year or in 2020, it will mark a major milestone for India’s technology scene. “People are starting to see entrepreneurship as a legitimate path.”
Although unicorns abound — CB Insights shows more than 250 private start-ups are now valued at US$1 billion or more — just 11 are from India despite the country’s high concentration of technical talent. Most of those companies are consumer focused, like online shopping site Snapdeal and ride-hailer Ola.
Freshworks, known as Freshdesk until last year, began in India in 2010 and now has offices in London, Berlin and Sydney with its headquarters in San Bruno, California. More than 1,400 people work at its product development centre in Chennai, India.
The company sells businesses software used by employees to handle customer service, sales and support. It counts more than 150,000 customers including Hugo Boss AG, Honda Motor Co and Toshiba Corp, and competes against Salesforce.com Inc, Zendesk Inc and ServiceNow Inc, among others. Freshworks said in June that it hit an annual recurring revenue rate of US$100 million. Freshworks co-founder and CEO Girish Mathrubootham said the company was able to reach that number, while burning through only US$60 million of the US$150 million it had raised.
Although Freshworks didn’t need the recent infusion as it still has money in the bank, high interest from new investors made Mathrubootham think it made sense to raise more if the terms were right. The existing investors, not wanting to get diluted, stepped up for the internal round, offering to write even larger sums than the US$100 million ultimately agreed upon. Mathrubootham said he will spend the next year or so expanding into Europe and Japan, improving the product and balancing his board with an independent director.
Going public, he said, is a source of national pride for him and something he wants to achieve for business as well as “for personal reasons”. — Bloomberg