 "The next phase is to prove we can be successful as a multiproduct company: Girish Mathrubootham")
Cloud-based customer engagement software firm Freshdesk has raised a seventh round of funding, of $55 million led by Sequoia Capital India, a new investor for the company, and existing investor Accel Partners. With this, the total it has raised so far is $149 mn. Since the earlier round, it has acquired six companies to widen its offering on various platforms. Girish Mathrubootham, founder and chief executive officer, talks to Gireesh Babu on the latest developments and the way forward. Edited excerpts:
Freshdesk has made several acquisitions and a latest round of funding. Where does the business stand?
We are in a pretty exciting phase and business is going through hyper-growth. A lot of works are happening in various aspects, including engineering and sales, and we are gearing up for the next phase of growth, which involves getting all the systems in place before it becomes well-oiled machinery. That is how we feel.
The first phase was to establish Freshdesk in a leadership position, making a global brand from India. We have launched multiple products. The next phase is to continue the momentum but also scale the new products to show we can be successful as a multiproduct company, not a single product one. We now have four products.
What is the status of the new products?
Freshsales is already scaling up nicely and is probably following the trajectory of Freshdesk or even faster. We are really excited, since it is a huge market and Customer Relationship Management (CRM) is a big opportunity to be tapped, since everybody knows the big leader and many people have been unhappy with the current solutions in the market.
We are also equally excited about Hotline.io, a very innovative product from Freshdesk. There is literally no competition for it, if you look at the features we offer. It is like adding a WhatsApp channel into every app. Mobile-first companies which have seen the product really loved it. The pipeline looks exciting for it and we just have to put our heads down and execute.
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It is a continuous process of evolution. We need to be looking at the trends and making sure we are best of the breed. We are focusing a lot on collaboration, machine learning, chat and chatbots, and expect innovations to come from Freshdesk in a lot of these areas.
What is the strategy behind the acquisitions you have made and the way forward?
We don’t have a plan on what type of technologies we need to acquire or where we need to acquire. We are taking it more opportunistically. When we got the first two- three companies, people who were not able to scale up independently started seeing Freshdesk as a natural home for start-ups in the B2B (business to business) space. We received a good deal flow.
Obviously, we look at team and technology. The highest priority would if the product or technology the team has built can be directly used into Freshdesk. But, even if the technology or the product is good and relevant, if we don’t like the entrepreneur or the founders, if we don’t feel they are a cultural fit into Freshdesk, then we don’t do the deal. We definitely want to have a good technology fit and a good cultural fit with the founding team. It will also be nice to have business revenue but in India, it is hard to acquire revenue, as a company with good revenue will get funded and continue for a longer time.
We are open to look at anything; if it makes sense for us, we will move. We are looking at technology, team, mostly in the B2B space, machine learning, customer support, CRM, related areas. We have not actually actively scouted for any start-ups with engineering teams in the US or Europe or overseas but good technologies, a good team from anywhere, and we are open for further acquisitions.
Could you elaborate on your latest round of fund raising?
We have always maintained we are not under pressure to raise any money and that has given us a lot of leverage. With the business we have and the team, culture, product and customer base, we have always been fielding inbound requests from investors globally. We wanted somebody who would not look only at it as a pure-play valuation but also understood what we are trying to build in Freshdesk and the long-term strategy, when we raise the funding.
I don’t optimise for valuation. I can wait for one more year and try to get more valuation but that is not what we do. I don’t want to go to the edge. We have enough money for five to six years; that is how we have always been.
Have you reached break-even?
We can break-even if we want but are investing in growth. We have always maintained very low burn. Considering the nature of our business, with a healthy net expansion rate where our customers pay more money as against what they paid a year ago, mainly because their business has also grown, we are actually investing in growth to get more customers.
In terms of people, we have 880 people in the organisation and around 80,000 customers. We don’t want to disclose the revenue. We are targeting 200 per cent growth this year.
Have you reached the status of a unicorn (a start-up valued over $1 bn)?
I think we are getting there but I am not looking at it. It could be more of a distraction now if we focus on it.