When startup Freshdesk raised $31 million dollars last June, the company said it was preparing for the bubble around enterprise tech valuations to burst. Now less than a year later, Freshdesk has gone back to the well for another $50 million—but this time, it’s looking to keep pace.
That trimming to enterprise valuations hasn't come reckoning, at least yet. All three major players in customer support software have since continued to grow—but Freshdesk is the only private company left of the bunch. So as Freshdesk was able to prove it doubled its own client base in 2014, the company felt justified to return to its existing investors for a bigger cash infusion.
“We know we need to scale our business faster and invest in our product,” says Freshdesk president Dilawar Syed. “We want capital so that it’s something we don’t even think about.”
The 2010-founded Freshdesk’s $50 million Series E round comes from the same investors that backed it in June at the Series D, with Tiger Global leading and Accel Partners and
It’s growing at a 100% clip, faster than the larger competition, with 40,000 customers, a new London office and another in Australia about to come online. A new service IT software that takes the same approach Freshdesk uses for customer service to IT support, called Freshservice, launched last year.
But while Freshdesk can point to anchor clients like
Freshdesk believes it’s set up to grow faster than either of the other “desks.” While Zendesk has more customers—more than 80,000 as of the end of last year, though that included about 34,000 $1 dollar starter accounts [Update: Zendesk says it exceeds 50,000 paid customers when you also count its 24,900 separate live chat accounts]—Syed says Freshdesk’s cost to acquire a new customer is 30% cheaper than its peers. And whereas Zendesk grew 76% for the year in revenue, Freshdesk has grown bookings more than 3x (300%) in the last several years, though it does not break out its paid vs. unpaid customers as a private company.
“The opportunity in this space overall is continuing to expand,” Syed says. “And we’ve done it by focusing on product, then hiring, and really managed our marketing spend.”
How Freshdesk pitches itself against its strong competition is to offer as much of a “consumerized” approach to onboarding and use for business customers as possible. Free trial users should be able to launch within minutes. And Freshdesk has to walk the walk on its own product by offering quick support to make sure customers know what they’re doing. That means much of the money raised will go back into engineering talent and the product itself, with an increasing focus on mobile.
“There are larger competitors that are more well-known, but if you contact them for help, when they do get back to you the answer isn’t that helpful,” says Joshua Barnett, IT manager at SolarCity, the $5 billion (market cap) solar company founded by Elon Musk and a Freshdesk client since June of 2014. “IT here can focus on key issues and our customer base can reach out directly when needed.”
Freshdesk hopes to woo more large-scale clients through international strength, with the European and Australian offices joining its headquarters in San Francisco and original founding location of Chennai in India. Its lead investor in this latest funding, Tiger Global, is known for spotting international tech investments originally based in China and India.
“We are seeing with cloud computing that you can build a global product from anywhere,” says Syed, before appropriating an old imperial slogan to describe the startup’s expansionist hopes.
“We like to say that the sun never sets on Freshdesk employees.”
