Steadview Capital bets on Freshworks in $85 mn secondary funding round

Alternative investment firm Steadview Capital has picked up a minority stake in customer engagement software company Freshworks.

The secondary transaction was worth $85 million, a spokesperson of the London-based investor confirmed. However, he declined to disclose details on exiting investors or the size of Steadview’s holding in the company.

The development was first reported by The Economic Times, which said the deal will see the exit of some of Freshworks’ early angel investors.

In its last known round, Freshworks raised $150 million in November 2019 led by returning investors Sequoia Capital, Accel and CapitalG. The round valued the Chennai-born software-as-a-service (SaaS) company at $3.5 billion, post-money.

In 2018, it raised $100 million in a growth round led by Accel and Sequoia, entering the unicorn club of private companies valued at $1 billion or more.

Founded in 2010 by Girish Mathrubootham and Shan Krishnasamy, the company was earlier known as Freshdesk. It raised $1 million in its first institutional funding round from Accel in December 2011. The following year, New York headquartered alternative investments firm Tiger Global Management joined Accel to invest $5 million. CapitalG, Alphabet’s growth investment fund, entered the company in 2014 during a $31 million round. In late 2016, Sequoia led a $55 million round in the company.

The SaaS provider offers cloud-based solutions for customer support, call centre operations, internal collaborations and marketing automation for enterprises across several sectors. Freshdesk, its flagship product, allows companies to conduct customer service operations from remote locations.

The Indian unit of the company reported a profit of Rs 30.1 crore for the financial year closed March 31, 2019. Its net profit rose to Rs 29.98 crore in FY19, from Rs 20.91 crore a year earlier, on a consolidated basis.

Acquisitions have been an important part of the company’s growth strategy.

In 2020, it bought two companies -- as Flint, an information technology (IT) orchestration and cloud management platform and AnsweriQ a machine learning and artificial intelligence solution startup.

Its other acquisitions include Silicon Valley-headquartered Natero; software startup Zarget; chatbot venture Joe Hukum; SaaS startup Pipemonk; social chat platform Chatimity; social media analytics venture Airwoot; visual collaboration platform Framebench; in-app customer support startup Konotor; social recommendation platform Frilp; and video chat software 1Click.io.

Freshworks competes with homegrown SaaS firm Zoho and US-based Salesforce, among others.

Steadview Capital is an Asia-focused alternative asset manager, with $2.5 billion in assets under management. It is backed by foreign sovereign wealth funds, university endowments, pension funds, foundations and family offices.

Its India portfolio includes beauty and personal care platform Nykaa, cab-hailing app Ola, edtech startup Unacademy; fintech firms BharatPe and INDWealth; and healthtech firm Innovaccer.