Protocol | Enterprise

Blowout IPO establishes Indian startup pioneer Freshworks as rival to ServiceNow and Salesforce

The company's stock closed up 32% on Wednesday, giving Freshworks a roughly $13 billion valuation.

Freshworks employees celebrate its IPO on the floor of the Nasdaq stock exchange.

Freshworks was India's first software-as-a-service business to IPO in the U.S.


Freshworks' monster debut on the public markets, exceeding its own expected valuation, firmly established the upstart enterprise software company as a threat to two of the industry's biggest names: Salesforce and ServiceNow.

The company's stock closed up 32% on Wednesday, giving Freshworks a roughly $13 billion valuation. While its shares were down slightly on Thursday trading, the IPO was a windfall for Alphabet and other investors.

But it's also a major win for India's startup community: Freshworks was the country's first software-as-a-service business to IPO in the U.S. A wave of public offerings from Indian companies is expected to follow, including from payment platform Paytm and discount hotel chain Oyo. And Indian startups are drawing investment from the likes of Salesforce, a16z and Microsoft.

"There are a lot of [Indian] startup founders that are building global SaaS companies," CEO Girish Mathrubootham told Protocol. "It's day zero, the way we look at it … because we see the opportunity to build a massive company."

Freshworks is often compared to Salesforce, but it has been competing with ServiceNow for even longer. Released in 2020, the startup's CRM product is still fairly new. However, it's been selling an IT service management tool since 2012. That product was an expansion of Freshworks' first tool — a customer service platform released in 2010 — that, at the time, organizations were increasingly using to address internal issues like technology problems or laptop requests.

Freshworks declined to disclose exactly how its $249 million in revenue in 2020 was split across the three product lines, but said 18% of customers use two or more.

Outside of its brand-name rivals and the home country of its founders, Freshworks' public offering stands out in another way.

Many of the blockbuster IPOs of the past year have been startups focused on the creation of new product categories. Confluent is a leader in the push towards real-time analytics. UiPath helped popularize robotic process automation. Unity is peddling a vision towards the metaverse for enterprises. And Palantir is a poster child for the modern data-analytics platform.

But the rise of Freshworks, as well as other startups like, signals another major change unfolding in enterprise software: The incumbents that gained prominence in the past two decades suddenly seem more vulnerable.

Companies like Salesforce helped build a "multitrillion-dollar industry by basically taking form fields and moving them on to the web. That is child's play compared to what is coming next," Gordon Ritter, a co-founder of Emergence Capital, told Protocol. "Those software players better really reimagine and rearchitect their systems or else they are going to get left behind by the new players that have access to the granular data."

Salesforce, for example, remains the market leader in CRM and commands a market cap of roughly $269 billion. And the future looks bright: The company just improved its revenue outlook for 2023. Outside of growing competition from startups like Freshworks, however, Microsoft is charging hard with its own offering and also partnered with Adobe and — a startup led by industry pioneer Tom Siebel — to build an "integrated suite of industry-specific AI-enabled CRM solutions."

But it's not just Salesforce. Adobe is facing new pressure from upstarts like Canva and Figma. And HR management software provider Personio is taking on Workday by targeting smaller organizations.

One of the advantages of Freshworks' system, according to Mathrubootham, is its ability to help populate increasingly popular customer data platforms with a single stream of information as opposed to a patchwork system, where data from Salesforce, Marketo, Gong and other software providers is all transported into a data lake for analysis.

"For all those companies that don't want that unwieldy stack, you don't have to go that route," he said. "You can have an integrated suite … all operating with the same underlying customer data."

And there appears to be a real opportunity for companies like Freshworks to succeed against the market leaders. For years, vendors like Salesforce created walled gardens around their data that made it difficult to move data outside of the company's own systems. Now, they are scrambling to build more open architectures to capitalize on the move toward automation and artificial intelligence. Whether they can pivot fast enough is the question.

Still, it can be challenging to try to compete against one tech giant, let alone several. In its IPO prospectus, Freshworks listed Oracle, Microsoft, SAP, Zendesk, Atlassian and other large software vendors as rivals. And it now faces the difficult task of expanding its customer base beyond small to medium-sized businesses and deeper into enterprises.

"CRM is a big market. Salesforce is talking about going from $25 billion to $50 billion," said Mathrubootham. "Yes, change is hard. But people change when they know that there is a better option available. And this is where we feel that having software designed … [for] the front-end user is a trend that is driving that change."

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