Freshworks, the Chennai-based software products and services company, has closed a $150-million (Rs 1,050 crore) funding round with existing investors that include Google, Sequoia and Accel, sources have told Moneycontrol.
“The funding round was closed on Friday,” said one of the sources. The company also crossed $200 million in annual recurring revenue, Freshworks' founder CEO Girish Mathrubootham told employees at an event to mark the startup's ninth anniversary.
The latest round of funding, eighth since Freshworks first raised capital in 2011, values the company at $3.5 billion. “This is a pre-IPO (initial public offering) round, which sets the valuation of the company and also puts a benchmark to what each Freshworks share could be valued at,” said a second source.
Freshworks could raise more funds before listing its shares by 2021.
Before the eighth round, Freshworks, a business-to-business company, had raised $249 million. Among the company’s earlier investors are CapitalG , the investment fund of Google’s parent Alphabet, and former Flipkart investor Tiger Global Management.
Freshworks’ rise has been fast.
In August 2018, the company was the first pure-play provider of software services over the internet to become a unicorn, when it raised $100 million from Accel and Sequoia Capital.
Earlier known as Freshdesk, the company was started by former Zoho Corporation employees Mathrubootham and Shan Krishnasamy in 2010.
Mathrubootham was the vice president of product management at Zoho, and the idea of starting Freshdesk, a customer-support software company, struck him when he received a broken LCD television, and he complained about it on social media.
The issue got resolved. In 2011, Accel Partners, Freshworks’s first institutional investor, bet $1 million on the company because Mathrubootham talked from experience and was solving a real problem.
“Freshworks’ listing on the bourses show that B2B startups are better bets for investors. India is following what is successfully happening globally,” the second source said.
In America, website infrastructure and security company Cloudflare, workplace productivity company Slack and software service company PagerDuty have had successful IPOs.Listing of B2B startups, a growing startup category, shows that investors believe that they can generate high-value revenue that is recurring and more definite than consumer startups, said the second source.