Freshworks Joins The Unicorn Club With $100M Series G Co-Led By Sequoia And Accel

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Freshworks makes software that does a lot for businesses. Founded in 2010, formerly under the name Freshdesk, the company now known as Freshworks offers cloud-based tools for sales management, recruiting, customer engagement, workplace chat, virtual call center infrastructure, and its original online help desk product. These are made available on a subscription basis both as a bundle and à la carte.

Today Freshworks announced two pieces of news: one regarding new funding and the other involves a new strategic hire.

Freshworks has raised $100 million in a Series G funding round at a $1.5 billion valuation, post-money, according to a spokesperson for the company. Accel Partners and Sequoia Capital led the round, which also saw participation from CapitalG, the (quite active) growth equity investment arm of tech conglomerate Alphabet. In conjunction with the capital raised across six previous rounds since the end of 2011, this financing brings Freshworks’s total venture funding to $250 million.

The company’s last round, a $55 million Series F announced in November 2016, valued the company at $700 million, post-money, according to Crunchbase data. So in nearly two years, Freshworks managed to double its valuation and join the increasingly-crowded unicorn club.

In a statement provided by the company, Girish Mathrubootham, Freshworks’s co-founder and CEO, disclosed the company’s current revenue and user figures. Freshworks has “$100 million in annual recurring revenue” and now serves “over 150,000 organizations,” including the NHS, Honda, Hugo Boss, Toshiba, and Cisco, among others, according to the executive.

Running on the assumption that these figures are current as of the tail-end of July 2018, we can back out some growth figures from prior disclosures from the company.

  • In November 2016, when the company announced its Series F round, TechCrunch reported that the company “has 100,000 customers, mostly small-to-medium size businesses.” In the nearly two years since its Series F, the raw count of Freshworks’s customers grew at a compound annual growth rate (CAGR) of 26 percent. At the same time, it appears that Freshworks added several big-name customers to its roles, presumably bringing in more revenue apiece than small-business customers.
  • An August 2017 report in VC Circle suggested that Freshworks pulled in “upwards of $50 million for FY16, with the Indian operations likely contributing close to 30%.” The VC Circle report also cites an article in India-focused tech publication Factor Daily which said Freshworks’s “consolidated revenues are likely to have grown to $70 million for FY17.”
  • In another interview with VC Circle, this time from June 2017, CEO Girish Mathrubootham declined to disclose certain revenue specifics (like average revenue per user, or ARPU). “All I can say is that we have been registering 70% year-on-year growth over the last two years,” Mathrubootham offered before continuing, “[as] for ARPU, I can only say that Freshdesk generates three times more ARPU than most of our other products.”

Between substantial growth in user counts, an overall improving quality of revenue, and prior statements about company growth, it’s safe to say that if Freshworks isn’t currently valued at $1 billion or more, it is close to it.

In addition to the new funding, Freshworks also announced that it’s brought on Suresh Seshadri – formerly the vice president of finance and treasury at AppDynamics – as its chief financial officer. Seshadri helped AppDynamics prepare for its initial public offering, according to a statement from Freshworks.

“Coming on board to work with Girish [Mathrubootham] and the rest of the executive team is an incredible opportunity, and I am confident that we are well-positioned to reach the next phase of Freshworks’ expansion.”

Freshworks’s nine-figure funding round closes out a record month of supergiant round announcements. In July 2018, about fifty rounds topped out at $100 million or more, with some extending well past $1 billion. It’s a pattern which started years ago, and it has been amplified by firms like Sequoia and others that have raised huge new funds to feed capital-hungry companies.

Freshworks’s path to IPO may be paved with another hundred million dollars, but whether it succeeds in not just taking off from its extended runway, but becoming a soaring SaaS success, is not certain.

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