Excitement and a sense of achievement were evident as Girish Mathrubootham, founder and Chief Executive Officer of SaaS (software as a service) start-up Freshworks, got ready to ring the opening bell at the Nasdaq MarketSite on Wednesday. Freshworks became the first Indian SaaS start-up to get listed in the US, and looks all set to raise $1.03 billion from its initial public offering (IPO), taking its valuation to $10.13 billion.
“I feel like an Indian athlete who has won a gold medal at the Olympics. I am really proud of how far we have come and more importantly I am excited about what’s ahead,” he said. Inspiration for the IPO came from an unlikely source. “The code name of our IPO was Project Superstar, named after the most successful movie star from Tamil Nadu, Rajnikanth,” Mathrubootham said. Coming on the back of the successful listing of Zomato on the Indian bourses, Freshworks’ IPO has set the Indian start-up ecosystem buzzing with excitement. Mathrubootham added that the firm was showing the world what a global product company from India can achieve. “The fact that we are doing it first in the US, here at the Nasdaq is truly amazing. I would like to say today is day zero for Freshworks all over again. ALSO READ: Freshworks m-cap crosses $13 bn; over 10% employees turn ‘crorepatis’ ”Confidence in the firm’s ability was also evident from the fact that it upped the pricing of its shares in its initial public offering on Wednesday to $36 apiece. According to Bloomberg, this comes after Freshworks had only on Monday lifted the planned range of the offering from $28 to $32. The shares began trading on the Nasdaq Global Select Market under the symbol “FRSH”, and the offering is expected to close on September 24, subject to customary closing conditions. In addition, the San Mateo-based start-up has granted underwriters a 30-day option to purchase an additional 2.85 million shares of Class A common stock at the IPO price, less underwriting discounts and commissions. The offering marks a significant rise in its valuation of $3.5 billion in November 2019, when it raised $150 million from Sequoia Capital, CapitalG and Accel. Going further back, in July 2018, it was valued at $1.5 billion. Its projected valuation represents a near six-fold increase in just over three years. This is indeed an achievement as Freshworks competes with global giants such as Salesforce, SAP, and Oracle. Financials In the first six month of calendar year 2021, the company’s revenue increased to $168.9 million, compared with $110.5 million in the corresponding period last year. Based on its regulatory filing, investors Accel and Tiger Global own 25.79 per cent and 26.24 per cent, respectively, in the company, while Sequoia Capital owns a little over 12.26 per cent. Experts expect many other SaaS players to for a listing. There are around a thousand funded SaaS companies in India, of which 10 have reached unicorn status. These start-ups generate about $2-3 billion in total revenues and employ nearly 40,000 people, according to a report by SaaSBOOMi. It added that Indian SaaS has the potential to create $1 trillion in value and nearly 500,000 jobs by 2030. Morgan Stanley, JP Morgan, and BofA Securities are the lead book-running managers for the offering. Jefferies and Barclays are book-running managers. Freshworks is one of the earliest success stories among Indian start-ups in the SaaS segment. Its much-awaited IPO also grabbed eyeballs when Mathrubootham thanked actor Rajnikanth in the initial documents for listing in the US market. The beginning The company was founded by Mathrubootham and Shan Krishnasamy as Freshdesk in 2010 and was rebranded as Freshworks in 2017. Freshworks started from a 700 sq ft warehouse in Chennai and has gone on to disrupt the customer relationship management (CRM) market, where it competes with the likes of Salesforce. Talking about his vision, Mathrubootham in the filing said the company has a vision to create an iPhone moment in business software by blending existing technology with unified, intuitive, and delightful experiences.