On Friday, the San Mateo-based startup, which was founded in Chennai, filed its application with the US Securities and Exchange Commission for a $100-million IPO, which CEO Girish Mathrubootham said is “a placeholder until the final terms of the listing are decided”.
Backed by marquee Silicon Valley funds Accel and Sequoia Capital as well as New York’s Tiger Global, Freshworks said that apart from a direct listing, its options include a merger with a special purpose acquisition company or further capital infusion from private investors.
The software-as-a-service startup—most recently valued at $ 3.5 billion—is expected to aim for a valuation of $10 billion with the IPO, Reuters reported. It is seeking to list its shares on the Nasdaq Global Select Market under the symbol FRSH. ET was unable to independently verify the valuation expectation.
Mathrubootham made a special mention of the Tamil filmstar Rajinikanth in the regulatory filing, saying the codename for the company’s IPO was Project Superstar after the actor.
“I want to express my love and gratitude to him for being my maanaseega guru. There is no comparable english word to express what this means. It is a mentor, a role model that lives in your mind, from whom you learn a lot by watching from afar,” Mathrubootham said of the iconic actor.
The customer engagement software maker, which rivals industry giant Salesforce, saw its revenue grow 53% to $169 million in the six months ended June 30, compared to $110 million in the year-ago period. At the same time, losses declined 83 % to $8.9 million.
IPO Rush
Freshworks, is the latest to join a rush of venture-funded companies in India that are diversifying beyond private markets on the back of a
stellar domestic listing by foodtech platform Zomato in July.
Meanwhile in the US, a wave of listings by technology ventures such as Zoom, Snowflake, Asana and Palantir have been extremely well received against the backdrop of increasing digitisation world over, especially after the onslaught of the Covid-19 pandemic.
Freshwork’s prospectus revealed that affiliates of investors Accel and Tiger Global both own over 25% of the company’s Class B shares, while Sequoia Capital owns a little over 12% of the same class of shares.
Product Push
Likening Freshworks’ software product portfolio as the Apple iPhone for business software, Mathrubootham said his company is “blending existing technology with unified, intuitive, and delightful experiences”.
“Before 2007, we were all using multiple devices — I personally had a Nokia cellphone, a Garmin GPS, a Sandisk MP3 Player, and a Canon point-and-shoot camera,” Mathrubootham wrote in the prospectus. “As consumers, we were quick to ditch our gadgets for a single product with a superior unified, intuitive, and delightful experience.”
The company said it now has over 52,000 customers and, in the last 12 months, has earned a revenue of $308 million, a growth of over 40%, while posting a net loss of $10 million in the same period.
Prior to founding Freshworks (previously known as FreshDesk), Mathrubootham was the vice president of product management at the ManageEngine division of Indian software products pioneer Zoho. He says the idea of founding Freshworks came to him after reading an article on how Zendesk’s customers were unhappy after it raised its prices by 60-300%. Mathrubootham soon spoke to his friend and colleague of many years Shan Krishnasamy and they went into business in 2010.
The company raised its first $1 million in funding from Accel in December 2011, and seven years later when it raised $100 million from Accel and Sequoia Capital as part of its seventh funding round, it became India’s first SaaS startup to be valued at over $1 billion, joining the likes of other unicorns such as Udaan, Swiggy and Byju’s.
