SaaS Startup Freshworks IPO at a Huge $9 Billion Valuation

    SaaS Startup Freshworks plans to raise upto $912 million through its initial public offering (IPO), as per the regulatory filings with the US Securities and Exchange Commission on Monday. Freshworks was last valued at $3.5 billion in November 2019.

    Freshworks will seek a valuation of almost $9 billion at the upper end of the price band, the filing showed. This will make Freshworks the most valuable SaaS startup from India, post-listing, zooming past the likes of application program interface (API) development platform, Postman, which was recently valued at $5.6 billion and mobile application testing platform, BrowserStack valued at $4 billion this year.

    The company mentions it will sell 28.5 million of its Class A common stock between the price range of $28 to $32 per share. If it manages to sell its shares at the top range, then it will raise $912 million, which according to a Reuters report, would value the company at around $9 billion. 

    Freshworks Seeks Valuation of $9 Billion for its IPO

    The software-as-a-service (SaaS) company had filed its IPO papers last month but had not divulged key details including the amount it was looking to raise. 

    Founded in 2010 by Girish Mathrubootham and Shan Krishnasamy, Freshworks said it plans to use proceeds from the IPO for general corporate purposes, such as operating expenses, working capital, and capital expenditures. It may also use a portion of the proceeds to acquire complementary businesses, products, services, or technologies. 

    In its latest regulatory filings with the SEC, Freshworks said it has a large addressable market of approximately $120 billion. And, the company estimates the annual potential market opportunity for its products to be $77 billion. 

    “According to IDC, by 2025, the markets we address within CRM will represent a $76 billion opportunity and the SSM market will represent a $44 billion opportunity,” Freshworks said in its offer documents. 

    Freshworks was last valued at $3.5 billion following a fundraise in 2019 and is backed by the likes of Accel, Sequoia Capital and Tiger Global. 

    A $9 billion valuation would take Freshworks to the top of the pile of SaaS startups from India, ahead of Postman which was valued at $5.6 billion in its last round, and Browserstack at $4 billion.

    In its filings last month, Freshworks said that its revenue in the last twelve months was $308 million. More importantly, its net loss reduced to $9.8 million from $57 million a year ago. The company claimed to have more than 52,500 customers worldwide. 

    According to filings, Tiger Global PIP VI Holdings and Accel India III (Mauritius) own 26.24% and 25.79% respectively. Sequoia Capital Global Growth Fund III has a 12.26% stake in Freshworks whereas the company’s co-founder and CEO hold 7.08%. Google owns 8.31% stake in it. The remaining 20% is owned by other stakeholders including its second co-founder  Krishnasamy.

    The company’s IPO is being led by Morgan Stanley, JP Morgan Chase and Bank of America. It is looking to list its shares in the Nasdaq Global Select Market. 

    Freshworks has several big-ticket competitors globally including the likes of Salesforce and Palantir.


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