Software as a service (SaaS) major Freshworks has filed for an initial public offering (IPO) in the United States. The company is looking to raise $100 million, a placeholder amount which could very well change going forward, its filings with the US Securities and Exchange Commission showed.
In a statement, Freshworks founder Girish Mathrubootham and Shan Krishnasamy said as they reflect on how far Freshworks has come these last 10 years, this is a proud moment for all of them.
Chennai-headquartered Freshworks was founded in 2010 by Girish Mathrubootham and Shan Krishnasamy. The founders said that they will avail the proceeds from the IPO for general corporate purposes, such as operating expenses, working capital, and capital expenditures.
Freshworks may also use a portion of the proceeds to acquire complementary businesses, products, services, or technologies, it said in the SEC filings. The company’s IPO is being led by Morgan Stanley, JP Morgan Chase and Bank of America. It is looking to list its shares in the Nasdaq Global Select Market.
“We started in a 700 square foot warehouse in Chennai in 2010. Our simple idea was to create a ‘fresh’ helpdesk in response to a poor customer service experience I had. We didn’t plan nor expect to change the world. Our dreams came in increments, each building on the next and expanding our vision over time,” said the founders.
In the SEC filing, Girish Mathrubootham said in 2011, the company’s big dream was to reach the $1 million revenue target. “In 2012, we started dreaming of our second product – Freshservice – even before we reached that threshold with Freshdesk. In 2014, we started dreaming of growing faster and building out an outbound go-to-market motion. Now, our dream is to be a disruptive player in the CRM market by breaking down the silos of marketing, sales, and customer support with a unified customer cloud. And in the future, we dream of breaking the silos of IT and HR, building a unified employee cloud,” said Girish Mathrubootham.
Freshworks was last valued at $3.5 billion following a fundraise in 2019 and according to a Reuters report, it is eyeing a valuation of $10 billion following the IPO. The company is backed by the likes of Accel, Sequoia Capital and Tiger Global.
That valuation will take it to the top of the pile of SaaS startups from India, ahead of Postman which was valued at $5.6 billion in its last round, and Browserstack at $4 billion.
In its filings, the SaaS startup said that its revenue in the last 12 months was $308 million. Its net loss reduced to $9.8 million from $57 million a year ago. The company claimed to have more than 52,500 customers worldwide.
According to filings, Tiger Global PIP VI Holdings and Accel India III (Mauritius) own 26.24% and 25.79%, respectively. Sequoia Capital Global Growth Fund III has a 12.26% stake in Freshworks, whereas the company’s co-founder and CEO hold 7.08%. Google owns 8.31% stake in it. The remaining 20% is owned by other stakeholders including its second co-founder Krishnasamy.
Freshworks’ filings also revealed that it was currently locked in a legal battle with software company Zoho. “On March 17, 2020, Zoho Corporation Pvt. Ltd. filed a lawsuit against us in the United States Court for the Northern District of California, alleging improper access of Zoho’s internal customer relationship management database,” Freshworks said in its IPO document.
“The complaint, as amended, seeks injunctive relief, damages of an unspecified amount with interest, and attorneys’ fees and costs. We reject the claims raised by Zoho and intend to vigorously defend the claims made against us.” it added.
Freshworks has several big-ticket competitors globally including the likes of Salesforce and Palantir.
In the SEC filing, Girish Mathrubootham said the company’ss success comes from breaking traditional business models and innovating on ways to build, grow, and scale.
“I’m very proud that Freshworks is a pioneer of Indian entrepreneurship, and of our ability to blend the art of Indian design with the science of Silicon Valley scaling. We’ve been on an incredible journey so far, working hard to build a company that is loved by employees and customers,” said Girish Mathrubootham.