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Minnow Freshworks nips at tails of SaaS giants Salesforce and Servicenow with IPO plans

Bach to basics: The well-funded IPO-er

Enterprise application minnow Freshworks has filed for IPO in the hopes that its SaaSy software can take on the likes of Salesforce.

The India-founded CRM specialist has published a Form S-1 registration statement with the US Securities and Exchange Commission relating to a proposed initial public offering, which reports earlier this year suggested might achieve a valuation of $10bn.

Freshworks specialises in providing both CRM externally and internal employee services for things like HR and IT, on the same platform, which it claims eases rollouts.

In time-honoured IPO tradition, the company is still loss-making. Losses hit $9.8m in the six months ended June 30, which to be fair had fallen from $57.1m from the same period a year earlier.

It recorded $168.9m revenue in H1, up from $110.5 million in the same period last year. To offer a sense of perspective, the omnipresent CRM monster Salesforce just recorded turnover of $6.34bn for the second quarter of 2021, up 23 per cent year-on-year.

CEO Girish Mathrubootham and CTO Shan Krishnasamy founded the company, originally as Freshdesk, in India's eastern city of Chennai in 2010.

It launched its first CRM product in 2016 and rebranded as Freshworks a year later. In 2019, it entered Gartner's magic quadrant, presumably with a bunch of pixies, leprechauns and gryphons.

According to Crunchbase, Freshworks has raised a total of $484m in funding over nine rounds. Their latest funding was raised on Jan 1, 2020.

In March 2021, it named Prakash Ramamurthy, a former senior veep at Oracle, as chief product officer.

Freshworks counts Bridgestone tyres, publisher Pearson and Swedish online shopping platform Klarna among its customers.

Speaking to The Register earlier this year, John Crossan, Freshworks veep and general manager of Europe, argued the first generation of SaaS applications had become "highly complex, expensive, fragmented and slightly unwieldy and unable to adapt to business processes."

On the inside of organisations – employee services – it competes with companies such as ServiceNow while in terms of serving external customers it competes with Salesforce. Crucially it does both using the same platform, Crossan – a Salesforce and Oracle veteran – told us.

"It is a single platform, singled code-base that is pre-built for IT applications and for an HR application set or for a customer application set. This is why it is a faster time to deploy because there's so much out-of-the-box relevance and much flexibility in terms of how we build the solution," he said.

Whether Freshworks lives up to its claims will surely be a moot point, but Salesforce and ServiceNow could do with some competition in their respective home markets. ®

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