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California: After raising $1 billion in an initial public offering priced above a marketed range, Freshworks Inc. increased by 32%.
Shares of the software company closed Wednesday at $47.55 in New York trading, giving it a market value of $13 billion. Accounting for employee stock options and restricted stock units, the fully diluted value of FreshWorks would exceed $14 billion.
A potential competitor to Salesforce.com Inc was valued at $3.5 billion in its 2019 funding round. FreshWorks sold 28.5 million shares on Tuesday for $36 each after being marketed for $32 to $34, a target the company had raised from $28 to $32.
Freshworks grew revenue by nearly 40% last year after the coronavirus pandemic pushed businesses to go digital, and sales continued to grow in the first half of 2021, while its net loss shrank.
Now with 52,500 customers, the company saw its revenue increase by $169 million in the first six months of this year, up from $110 million in the first half of 2020. Its net loss narrowed to $9.8 million from $57 million a year ago. for its filing.
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Freshworks was founded in India and moved to Silicon Valley to be closer to customers. Now based in San Mateo, California, the company has a substantial workforce in the southern Indian city of Chennai. In his filing with the US Securities and Exchange Commission, founder Girish Mathrubootham compared FreshWorks software to the iPhone, saying businesses should not rely on multiple devices to connect with customers.
The affiliates of Accel India and the others in Tiger Global Management each control more than a quarter of the company’s Class B shares.
Mathrubhumi said that when he started the company, he wanted to reach $1 million in revenue. He said that until Shekhar Kirani of Accel kept the idea of US IPO in his mind.
“They said you could sell Freshworks and make a lot of money, or you could be the first Indian company in a SaaS to go public in the US and that would be a truly historic milestone,” Mathrubhumi said. “And from that moment today’s dream really began.”
‘Respect’ for Salesforce
He said he considers Marc Benioff of Salesforce.com to be an “amazing leader.”
“We have a lot of respect for Salesforce and what they’ve built,” he said. “We would love to continue building Freshworks to greater heights.”
Accel Partner Sameer Gandhi, a member of the Freshworks board, said the company does not need US sales professionals to get the startup off the ground.
“The product has to be the vendor,” he said, adding that the company continues to grow because its software is intuitive and easy to use. He said he expects the company to make more acquisitions.
The IPO was led by Morgan Stanley, JPMorgan Chase & Company and Bank of America Corp. Shares of FreshWorks are traded on the Nasdaq Global Select Market under the symbol FRSH.bloomberg
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