Freshdesk raises $55 million in series-F round
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Bengaluru: Customer support software maker Freshdesk Inc. on Tuesday said it raised $55 million in funding, in a round led by new investor Sequoia Capital, with participation from existing investor Accel Partners.
Freshdesk, which is based in San Bruno, California and has a large presence in Chennai, raised $50 million from Tiger Global Management in April 2015. This latest round of funding brings the total amount raised by the company to $150 million, making it one of the most well capitalized product start-ups in India. The firm’s earlier investors include Google Capital.
The six-year-old start-up makes software that helps small and medium businesses handle their customers. It sells this software to companies over the Internet for a monthly fee, in a model known as software as a service (SaaS).
Although enterprise SaaS dominates now, small and medium business SaaS will overtake it by 2020, according to a March 2016 report by Google and Accel India, which predicts that the $24 billion revenue from the small and medium business SaaS market in 2015 will increase to $76 billion by then.
Freshdesk said it will use the additional funds to focus on the new products it launched earlier this year.
After starting out with one product, also called Freshdesk, a cloud-based customer support platform, in 2014 it launched Freshservice, which helps companies meet their internal IT support requests.
In February, it launched Hotline.io, which allows businesses to provide support to their customers from within apps, and its most recent product launch is called Freshsales, a CRM software to help sales teams.
While typical SaaS companies build one product, and invest heavily in sales to conquer the market for that one product, Freshdesk believes there is great scope in building an ecosystem of products that complement each other.
Also Read: Freshdesk buys chat-bot firm Chatimity
Analysts say this is prudent for a company catering to small businesses.
“Although a multi-vendor approach is the most popular when it comes to CRM, for the SMB (small and medium business) market, it is easier if they pick everything from one company. The smaller the company is, the easier this will be,” said Olive Huang, research director at advisory firm Gartner.
Huang also said that Freshdesk needs to create differentiation to stand out. “What if their bigger counterparts reduce price in their segment? They wouldn’t have any space. Eventually they cannot sell only because they are cheaper; they have to have a differentiator. That hasn’t come up yet,” she said.
Freshdesk serves more than 80,000 customers, although it doesn’t disclose how many of these are premium paying customers and how many use the free service it offers. It has around 850 employees and has regional offices in London, Sydney and Berlin.
According to the Magic Quadrant research report for CRM vendors, published by Gartner earlier this year, “Freshdesk’s solution is very good at the basics. For many smaller organizations with uncomplicated support needs, it makes sense to shortlist Freshdesk. Larger organizations should not rule it out either.”
The same report also says that Freshdesk needs to increase its sales capabilities to realize its potential.
“We met Freshdesk four years back when it was getting started and have been tracking their progress closely ever since,” said Mohit Bhatnagar, managing director, Sequoia Capital India in a statement. “They have a world-class product vision and Sequoia is delighted to partner with Girish and lead this growth capital round to help scale India’s leading SaaS company.”
Sequoia Capital, in September, led a $51 million funding round for enterprise SaaS company Druva, which is also based in India and the US.