Chennai and California-based software products and services company, Freshworks has completed a USD 150 million funding round at a valuation of USD 3.5 billion from existing investors including Google, Sequoia, and Accel Partners, people close to the matter told Moneycontrol.
It is also scaling up its US operations as various speculative reports of an initial public offering (IPO) in the next two years are doing rounds.
“This is a pre-IPO round, which sets the valuation of the company and also puts a benchmark to what each Freshworks share could be valued at,” the news report quoted one of the sources.
Freshworks’ founder and CEO, Girish Mathrubootham, during its ninth anniversary event told employees that the company has crossed USD 200 million in annual recurring revenue.
Freshworks plans to raise more funds before going public by 2021. The software-as-a-service (SaaS) unicorn is betting hard on promising business opportunities from small and medium businesses in the US. The nine year old firm has now crossed USD 200 million in annual recurring revenue.
In August 2018, the firm raised USD 100 million from Accel Partners and Sequoia Capital. Till date Freshworks has raised nearly USD 249 million. Its earlier investors include CapitalG, the investment arm of Google’s parent Alphabet and Tiger Global Management.
The B2B company has a product portfolio that includes software for CRM in sales, customer support software, and IT management. Presently the company’s tools are used by over 150,000 organizations, including Cisco, Toshiba, Honda, and Hugo Boss among others.
The top markets for Freshworks include the US, Europe, and India, while it also has a presence in Australia, Japan, Singapore, and the Middle East. The company recently acquired Natero, a customer success management software company, its tenth acquisition since inception.
While its Chennai office has 2,000 employees, the US headquarters has a headcount of nearly 200. It plans to rope in over 100 sales and solution engineers shortly. It competes with the likes of Salesforce and Microsoft in the US market.
A large chunk of Freshworks’ revenue comes from small and medium businesses. “Smaller customers have a really hard time dealing with the complexity (of legacy SaaS software) and get easily frustrated by the experience and the price tag. And so, they’re looking for a fresh solution. There’s just so much of that opportunity, both in net new customer acquisitions who haven’t been in the cloud before, as well as those converting,” David Thompson, chief marketing officer at Freshworks told local newspaper Mint.