Freshworks, founded in Chennai and headquartered in San Mateo, California, raised $100 million last year at a valuation of $1.5 billion.
A discussion about India’s unicorn is focused either on the likes of Zomato, Swiggy or Ola, or centres around consulting firms like Mu Sigma, but a software-as-a-service (SaaS) company is gaining ground. Freshworks, founded in Chennai and headquartered in San Mateo, California, raised $100 million last year at a valuation of $1.5 billion. The SaaS company started nine years ago, and has expanded its operations in the US and records $100 million in annual recurring revenues. It has done so on the back of increasing services and newer products like Freddy, its omnibot platform. Though the company does cater to players like Zomato and Lenskart in India, most of its business accrues from the US.
While revenues are still miniscule as compared to $13 billion that major SaaS player Salesforce registered in FY19, Freshworks aims to increase its revenues to $1 billion within the next few years. Gartner expects the SaaS market to be $85 billion this year, and $113 billion by 2021. “Our goal is to provide a democratic platform, and we have been growing organically. Our growth rate in the second quarter of 2019 was 61% y-o-y. We expect to keep this up, and none of our competitors is growing at this pace. We will be opening a new office in Denver, and we have been expanding in Europe as well,” said David Thompson, CMO, Freshworks.
Although the growth has come on the back of small and medium businesses, Freshworks is changing its approach. The company, which had over 65% of its portfolio in SMBs, is slowly shifting base to mid-market companies. “It is trending towards more mid-market companies. We have a twin-engine model and so lots of investment in the US,” Thompson said.
Besides focusing on acquisitions — in May an AI platform called Natero marked the tenth acquisition — and R&D, it is doing so on the back of aggressive advertising targeting its customer base of Salesforce and ServiceNow. “We have been investing more in building the brand. We targeted these companies based on a Forrester report that claimed 69% of the Salesforce users were not happy with the platform and were planning to switch, and thus started our #failsforce campaign,” Thompson said.