Freshworks on Tuesday announced it has secured US$100 million in funding from Accel and Sequoia Capital India with the participation of CapitalG (formerly Google Capital).
That brings the total amount of capital raised since the San Bruno, California-based firm’s 2010 launch to $250 million. CapitalG, Sequoia and Access all participated in previous rounds of funding.
Investment firm Tiger Global Management — Freshworks’ largest shareholder and an early backer — led the company’s Series B, C, D and E rounds of funding, noted Arvind Parthiban, Freshworks’ director of marketing.
“The new funding will be used to invest in our platform and to continue scaling internationally,” he told CRM Buyer.
More than 150,000 companies worldwide are Freshworks clients. The majority of them are small and mid-sized businesses, but the company also serves large companies, including Toshiba, Honda, Bridgestone, Cisco and the University of Pennsylvania.
There has been speculation that Freshworks might be revving up to launch an IPO next year. Its recent appointment of Suresh Seshadri as CFO bolstered those rumors. Seshadri helped AppDynamics prepare for its IPO in 2016 when he was its VP of finance and treasury. Cisco later purchased AppDynamics.
“We will eventually IPO,” Parthiban said, but no date has been set. “Right now, we are focused on growing the business.”
What Freshworks Offers
All Freshworks products are offered through the Software as a Service model:
- Freshdesk, its flagship customer support product
- Freshservice IT service management software
- Freshsales CRM software
- Freshcaller call center software
- Freshchat customer messaging software
The last four products work together to help marketers, human resources and support professionals engage with customers and work together more effectively.
The company earlier this summer unveiled Freshworks 360 and announced it had reached $100 million in annual recurring revenue.
Freshworks 360 is comprised of Freshdesk, Freshsales, Freshmarketer, Freshcaller and Freshchat.
It is a cloud bundle specifically created “to help businesses communicate more effectively and gain a 360-degree view of customer data,” Parthiban remarked.
The technologies in Freshworks 360 originated with some of the nine acquisitions Freshworks has made over the years.
“While more acquisitions may be in play, [Freshworks] needs to be careful about acquisitions versus organic growth,” cautioned Rebecca Wettemann, VP of research at Nucleus Research.
“In an area where end-to-end integration becomes increasingly important, they can’t just acquire companies,” she told CRM Buyer.
“They have to integrate technologies and have a common database — not just a set of bolt-ons — to take advantage of their roots as a best-of-breed provider,” Wettemann explained. “Otherwise, they lose the benefits of best-of-breed without the advantages of breadth of functionality.”
The company also offers Freshworks Marketplace, which lets app developers monetize their apps through the Freshworks customer base, conduct joint marketing programs with Freshworks, and collaborate with other app developers on its platform.
The Sales Team Software Problem
It is questionable how much Freshworks 360, which leverages data from the Freshsales CRM package, will help sales, although that is probably true for all sales efforts leveraging CRM, suggested Byron Matthews, CEO of the Miller Heiman Group.
“Many sales organizations see technologies like a CRM as the cure-all for sales performance without understanding that CRM was built for sales executives and managers rather than actual sellers,” he told CRM Buyer.
CRM “provides a way for executives and managers to track results but doesn’t give sellers what they need — a forward-looking tool they can depend on for in-the-moment sales insights,” Matthews said.
On average, participating companies’ sales teams already had invested in 10 sales solutions, and they planned to deploy an additional four soon, found the 2018 Sales Operations Optimization Study conducted by the Miller Heiman Group’s CSO Insights division. However, only four of the 10 tools they invested in had an adoption rate of more than 50 percent.
“We found that only 28 percent of sales people report a significant increase in productivity due to the use of sales technology,” Matthews noted.
More than 30 percent of sales organizations have an adoption rate lower than 75 percent for CRM systems, Matthews said. “By combining predictive analytics with sales methodology, sellers buy in to keeping their CRM up to date, because it finally plays a part in their success.”
The new generation of CRM tools, which use artificial intelligence and analytics, promise many organizations double-digit increases in win rates and average deal sizes and decreases in sell-cycle lengths, Matthews observed.
“We are now reaching the fourth wave of CRM, which is AI-driven, insight-led, and powered by sales processes and methodology,” he remarked. “The way I engage my CRM system will be based on what I need to do, and defined by that methodology. The time of having a generic CRM interfacer is going to end.”
Salesforce, ZenDesk and other smaller players are Freshworks’ key competitors, Nucleus Research’s Wettemann said. “The advantage we’ve seen from Freshdesk is high usability and relatively lower cost compared to competitors like Salesforce and ZenDesk.”
Freshworks “was built for the end user,” Parthiban pointed out. “While some other SaaS companies sell bloated software packages that require significant professional service resources, all the products in our customer engagement platform are designed to work together from the start.”
Further, Freshworks’ SaaS approach means customers “don’t need to deal with the complexities of on-premises installations,” Parthiban noted. “They can enter their credit card information on our website and begin using our products instantly.”