Freshworks files $ 100 million IPO in US
BENGALURU : A customer relationship management software platform, Freshworks Inc. has filed a $ 100 million initial public offering (IPO) with the US Securities and Exchange Commission (SEC).
The 11-year-old software as a service (SaaS) startup has appointed Morgan Stanley, JPMorgan, BofA Securities, Jeffries and Barclays as book managers for the IPO, among others.
Freshworks joins the growing list of Indian unicorns heading to public markets. These include Paytm, the leader in financial services, insurtech player PolicyBazaar and beauty marketplace Nykaa. Merchant fintech Pine Labs is also looking to list on U.S. stock exchanges in 2022.
The net proceeds of the IPO will be used by the company for general corporate purposes, including to cover working capital requirements, operating expenses and capital expenses.
The SaaS unicorn, which was last valued at $ 3.5 billion in November 2019, said it will also use part of the net proceeds for strategic acquisitions or investments in businesses, products, services or complementary technologies.
“Freshworks is the company that wasn’t supposed to win. Whether we could differentiate ourselves in crowded markets, compete with larger players, or build a global SaaS company out of India, the doubts were always there. And people didn’t hesitate to tell me! Over the years, I’ve heard it all, including: There are 600 support services out there. How do you plan to win? You can’t find talent in Chennai; you can’t win unless you move to Bangalore, ”Freshworks founder Girish Mathrubootham said in a letter from the founder as part of the prospectus.
Freshworks has raised more than $ 327 million in funding to date from Accel, CapitalG, Sequoia India and Tiger Global Management. It has more than 52,500 clients in 120 countries.
“Freshworks is a very special company. We were unconventional from the start – not for its own good, but because we saw an opening in the market for a one-size-fits-all approach. We weren’t founded in Silicon Valley. We did not target large companies. We did not have access to a pool of talent already there. We offered a “fresh” approach based on efficient, product-oriented, low-cost, contactless sales; and we targeted massive and underserved markets. And we had a simple mantra: Happy employees create happy customers. In fact, we’ve made it our mission, ”added Mathrubootham.
The company reported an increase in revenue of approximately 45% between calendar year 2019 and 2020. For 2020, the company’s overall revenue was $ 250 million. The company reported an 84% increase in net losses between 2019 and 2020. For Freshworks, losses for calendar year 2020 were $ 57.3 million.
However, the company has made a concerted effort to cut its losses in 2021. For the six months ending June 30, Freshworks’s losses have fallen nearly 83% to $ 9.84 million in 2021.
Mathrubootham, a known Rajnikanth fan, also mentioned his idol.
“The code name for our IPO was Project SuperStar, named after Tamil Nadu’s most successful movie star Rajinikanth. 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. He’s a mentor; a role model that lives in your mind, from whom you learn a lot by watching from afar […] Thanks, Thalaivaa! Mathrubootham said in documents filed by the company with the SEC.
The company, in its risk factors, said it may not be able to achieve profitability or continue the rapid growth caused by the covid-19 pandemic.
“We have a history of losses and we may not be able to achieve profitability or, if we do, maintain profitability. […] We have experienced rapid growth in recent periods, and our recent growth rates may not be indicative of our future growth, ”Freshworks said in its company filings.
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