Freshworks lists on Nasdaq after billion-dollar IPO

Freshworks lists on Nasdaq after billion-dollar IPO

Bengaluru & Chennai: Freshworks became the first Indian software products company to list on the Nasdaq stock exchange, raising over $ 1.03 billion from investors through its initial public offering at a market cap of $10.13 billion, triggering elation amongst startup mavens who expect this milestone listing to open the floodgates for mega product companies to be built out of India

The San Mateo-based startup that was founded in Chennai, sold 28.5 million shares at a price of $36, the company said in a press release on Wednesday, up from the marketed range of $32-$34 the company announced earlier this week, pointing to strong investor interest.

“I’m really proud of how far we’ve come, but I’m really excited about what’s next for Freshworks. We’re all part of something that’s truly inspirational. We’re showing the world what a global product company from India can achieve. The fact that we’re doing it first in the US markets with Nasdaq is truly amazing. Today is day zero for Freshworks all over again and a beginning of so much more,” said Girish Mathrubootham, cofounder and CEO at Freshworks.

Investors who backed Freshworks as a startup – winner of ET’s Startup of the Year in 2016 – say the company’s listing on Nasdaq under the symbol FRSH will make it easier for the next set of Indian companies to aim big.

“It’s going to stiffen the spine and provide immense belief that we can build very large $10 billion plus companies from India by building products in India for the world,” Mohit Bhatnagar, Managing Director at Sequoia Capital, a venture firm that has backed Freshworks.

Freshworks was valued at $3.5 billion when it raised $150 million from Sequoia Capital, CapitalG and Accel in November 2019.


Freshworks, which just last week was hoping to raise around $800 million at a $9 billion valuation, said the increase was due to strong investor interest.

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Freshworks founder Girish Mathrubootham started the company in 2010 after he saw an opportunity to build an offering after reading an article on how customer support and sales communication platform Zendesk’s customers were unhappy after it raised its prices by 60-300%. Mathrubootham soon spoke to his friend and colleague of many years Shan Krishnasamy to offer customers a competing and effective product at a lower price.

The company raised its first $1 million in funding from Accel Partners in December 2011, and seven years later when it raised $100 million from Accel and Sequoia Capital as part of its seventh funding round, it became the country’s first SaaS firm to be valued at over $1 billion, joining the likes of other firms such as Udaan, Swiggy and Byju’s.

The listing will also benefit two thirds of the over 4300 employees of Freshworks, who have employee stock options, with Mathrubootham’s philosophy of a company that is “optimised for happiness” of its people.

Freshworks joins over a dozen odd Indian companies such as Infosys, Wipro, WNS, Dr Reddy’s and HDFC Bank to list on the US stock exchanges. Infosys was the first Indian company to list on Nasdaq in 1999.

Freshworks, is also the latest to join a rush of venture-funded companies in India that are also aggressively diversifying beyond private markets on the back of a stellar domestic listing by food technology platform Zomato in July.

Likening Freshwork’s software product portfolio as the Apple iPhone for business software CEO Mathrubootham said his company is “blending existing technology with unified, intuitive, and delightful experiences.”

“Before 2007, we were all using multiple devices – I personally had a Nokia cellphone, a Garmin GPS, a Sandisk MP3 Player, and a Canon point-and-shoot camera. As consumers, we were quick to ditch our gadgets for a single product with a superior unified, intuitive, and delightful experience,” Mathrubootham, a fan of actor superstar Rajnikanth, wrote in the prospectus.

The company said it now has over 52,000 customers and in the last 12 months has earned a revenue of $308 million, a growth of over 40%, while posting a net loss of $10 million, in the same period.

Meanwhile, in the US a wave of listings by technology ventures such as Zoom, Snowflake, Asana and Palantir have been extremely well received in the backdrop of increasing digitisation world over, especially after the onslaught of the Covid-19 pandemic.

In addition, Freshworks has granted the underwriters a 30-day option to purchase up to an additional 2,850,000 shares of Class A common stock at the initial public offering price less underwriting discounts and commissions.

Freshworks reported a 53% surge in its revenues to $169 million in the six months that ended June 30, 2021 compared with revenue of $110 million recorded in the same period last year. At the same time, losses declined sharply by 83 % to $ 8.9 million.

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