Startup of the year: Freshworks aims to become a $1-bn company in 5 years

Freshworks has set its sights on increasing revenue to over $1bn inthe next five years as it prepares to take advantage of the vast untapped SaaS market

Early this year, customer engagement software company Freshworks announced that it had crossed $300 million in annual recurring revenue (ARR). In May 2020, it had said its ARR was $200 million. This is impressive growth in a year when businesses were hit hard by the Covid-19 pandemic.

The pandemic did not stop Freshworks from releasing new products and making strategic acquisitions in the AI (artificial intelligence) space, with the company remaining focused on its goal to become a $1 billion revenue firm.

Staying relevant to customers is what worked for the company, says Freshworks founder and CEO Girish Mathrubootham. “Many businesses found our technology incredibly valuable in 2020, as they were forced to embrace digital transformation and new companies tried our products to find better ways to serve their customers.”

As always, but particularly during 2020, companies were looking for products that provided a greater return on their tech spend. They also needed a partner to help them better serve their customers and products that empowered their teams to provide better service, he added.

While a number of business verticals like travel, leisure and hospitality were hit hard during the pandemic, Freshworks benefitted from a horizontal strategy and its presence in the education, ecommerce and shipping segments. “We showed that horizontal cloud-based software catering to a wide range of verticals, geographies, and applications could thrive amid market uncertainty,” says Mathrubootham.

Freshworks makes a variety of business software tools, from customer relationship management to help-desk software, and commands respect among investors. It raised $150 million for its Series H round of funding from existing investors like Google, Sequoia and Accel, taking its valuation to $3.5 billion towards the end of CY2019.

Among key reasons for Freshworks’ success has been the ease of design and intuitiveness it has engineered into its products, which makes customers comfortable. Mathrubootham believes that if product companies are to be globally successful, the design and product offering must not confuse. The focus should be to remove as many barriers as possible between the customer and the product.

Freshworks has emerged as one of the fastest-growing players in the software-as-a-service (SaaS) space globally. SaaS companies founded by Indian entrepreneurs are poised to reach $18-20 billion in revenue, with the potential to capture 7-9 per cent share of the global SaaS market by 2022, according to experts.

Mathrubootham points out that Freshworks experienced a softening of demand in the first part of 2020, but “we were fortunate to rebound nicely in the latter part of the year, based on the strength of our product portfolio and our ability to meet the demands of our customer base.”

Freshworks also innovated on products, scaled up its executive bench and closed two acquisitions in 2020.

It acquired AnsweriQ, a provider of machine learning (ML) and AI for larger enterprises. AnsweriQ complements Freshworks’ AI engine, Freddy, by enabling enterprise organisations to use existing customer data to scale self-service experiences and automate complex customer workflows. Freddy can now anticipate customer needs, make conversation-based agent recommendations and perform tasks such as refunds and cancellations with no manual input. The technology significantly improves customer experience and frees up agent time to handle more complex requests.

The company also acquired Flint, a leading IT orchestration and cloud management platform, to bolster its IT service management and IT operations management capabilities. This acquisition provides greater visibility for IT teams to better manage hybrid infrastructures, optimise spends and automate employee workflows. Mathrubootham is clear that Freshworks will always look at acquisitions to fulfil its vision.

Mathrubootham started Freshworks along with other co-founders more than a decade ago, in a friend’s office in a residential area of South Chennai, later converting a warehouse into an office. It has since grown rapidly and expanded  operations across the globe. It is one of the most successful startups from India in the SaaS space, garnering global recognition. Headquartered in San Mateo, USA, Freshworks has over 3,500 team members spread over 13 global locations. 

Where does Mathrubootham see Freshworks in the next five years?

“We’ve been growing Freshworks for over 10 years now — expanding products, bringing in new customers and adding to our global team around the world. There’s still a vast untapped market in which we compete, which will fuel our growth plans as we look to become the first product company with roots in India to cross $1 billion in revenue,” he says.