Freshworks gears up to compete in’s market


(Bloomberg) Freshworks Inc., a fast-growing provider of CRM software that integrates with ecommerce technology, is quickly building resources to compete against much larger established rivals like Inc. Freshworks’ stock rose 32% this week after the company raised $1 billion in an initial public offering priced above a marketed range.

We have great respect for Salesforce and what they’ve built. We would love to continue to build Freshworks to greater heights.

Girish Mathrubootham, founder and CEO

Freshworks Inc.

Girish Mathrubootham - Freshworks

Girish Mathrubootham, founder and CEO, Freshworks Inc.

Among the Freshworks product suite are such applications as Freshsales, which it describes as AI-powered “ecommerce CRM software” that provides a company’s marketing and sales teams “a unified view of leads” to help segment and target website visitors, turn them into leads, and interact with them via live chat, email, text messages or telephone.

“When your lead browses your ecommerce website and looks for information, you have a chance to engage with the lead,” increase conversions with personalized interactions and minimize cart abandonment, Freshworks says.

Launched in 2010, Freshworks says it has more than 50,000 customers and more than $300 million in annual revenue.

Shares of the software company closed at $47.55 Wednesday in New York trading, giving it a market value of $13 billion. Accounting for employee stock options and restricted stock units, Freshworks would have a fully diluted value of more than $14 billion.

The potential competitor to far larger was valued at $3.5 billion in a 2019 funding round. Freshworks sold 28.5 million shares Tuesday for $36 each after marketing them for $32 to $34, a target that the company had elevated from $28 to $32.

Freshworks boosted revenue about 40% last year after the coronavirus pandemic prompted businesses to go digital, and sales continue to grow in the first half of 2021 while its net loss shrank.

Now with 52,500 customers, the company saw its revenue grow in the first six months of this year to $169 million, up from $110 million in the first half of 2020. Its net loss shrank to $9.8 million from $57 million a year ago, according to its filings.

Promoting a single tool to connect with customers

Freshworks was founded in India and moved to Silicon Valley to be closer to customers. Now based in San Mateo, California, the company retains a substantial workforce in the southern Indian city of Chennai. In its filings with the U.S. Securities and Exchange Commission, founder Girish Mathrubootham likened Freshworks software to the iPhone, saying businesses shouldn’t have to rely on multiple tools to engage with customers.

Affiliates of Accel India and others of Tiger Global Management each control more than a quarter of the company’s Class B shares.

Mathrubootham said that when he started the company, he wanted to reach $1 million in revenue. He said that was until Shekhar Kirani of Accel put the idea of a U.S. IPO in his head.

“He said you can sell Freshworks and make a lot of money, or you can be the first Indian company in SaaS to go public in the U.S. and it would really be a historic milestone,” Mathrubootham said. “And from that point on that was when the dream towards today actually started.”

‘Respect’ for Salesforce

He added that he considers Marc Benioff of an “amazing leader.”

“We have great respect for Salesforce and what they’ve built,” he said. “We would love to continue to build Freshworks to greater heights.” Salesforce—whose CRM and other software applications integrate with its Commerce Cloud B2B and retail ecommerce software—this week raised its revenue outlook to over $26 billion for its current fiscal year ending Jan. 31, 2022.

Accel partner Sameer Gandhi, a Freshworks board member, said Freshworks didn’t need U.S. sales professionals to get the startup off the ground.

“The product has to be the salesperson,” he said, adding that the company continues to grow because its software is intuitive and easy to use. He added that he expects the company to make more acquisitions.

The IPO was led by Morgan Stanley, JPMorgan Chase & Co., and Bank of America Corp. Freshworks shares are trading on the Nasdaq Global Select Market under the symbol FRSH.

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