Category: Funding Rounds

Freshworks becomes next unicorn with US$100 million funding led by Sequoia, Accel

If you haven’t been following the venture capital network in India, Freshworks is one of the larger SaaS providers you have probably never heard of… well, until now.

California and Chennai-based customer engagement software maker Freshworks has officially joined the country’s unicorn club, after raising US$100 million in a fresh round of funding co-led by Sequoia Capital and Accel Partners.

This new funding values the company at around $1.5 billion, doubling up from the valuation of $700 million it reached in late 2016.

Question, Who is Freshworks?

Founded in Chennai, India in 2010 as Freshdesk, the startup began as a helpdesk software providing a single cloud-based customer support solution for businesses.

In less than a decade, the firm grew exponentially, moving beyond customer service to offer a host of innovative product suites in ITSM and CRM domains.

From Freshdesk to Freshmarketer, the startup owns products ranging from sales CRM software to recruitment tools and IT streamlining software, and this ultimately drove the name change to Freshworks.

So, now if you ask what Freshworks does?

Freshworks

Image Source: Freshworks.com

It provides organizations of all sizes with a series of SaaS solutions that make it easier for customer support, sales and marketing professionals to communicate efficiently with customers for better service and to collaborate with team members and resolve customer issues.

The startup has a workforce of more than 1,000 employees globally across five offices in India, United Kingdom, Germany, Australia and the United States.

To date, their software is being used by over 150,000 organizations around the world, counting established names like Bridgestone, Toshiba. Cisco, NHS, Rightmove, Hugo Boss, Honda, and Citizens Advice

Looking at the success of the startup today, Ramesh Ravishankar, the marketing Director of Freshworks said that the metrics and insights from Google have played a big part in understanding and continuing their growth.

“Google tools are the most sophisticated for measuring a channel’s effectiveness. We are well-armored when having to talk about the return on investment of Google products.”

Freshworks Google Marketing

Image Source: Freshworks.com

From launch, Freshworks has been using Google Search advertising to build a customer base in mature markets across the United States and Europe.

The startup also adopted a unique global inside sales model that lowered the company’s cost of selling. This enabled Freshworks to put more into their digital marketing budget, and improve the customer on-boarding experience.

At the same time, as software products move from on-premise to a cloud-based model, the SaaS market in India has seen a rapid evolution. Instant decision making, cost-effectiveness, low risk, greater flexibility combined with an increasing mobile workforce and customers has been the driving force behind SaaS adoption.

“Freshworks has built the only customer engagement platform on the market that elegantly meets the needs of a business of any size with software that is modern, intuitive and affordable,” said Sameer Gandhi, a partner at Accel.

Today, Freshworks is a global powerhouse in cloud-based business software with a majority of revenue coming from North America, followed by Europe. They now have a customer base of over 130,000 with 60% of their business coming through Google products.

What’s next? Talks about IPO

With Freshworks riding on an incredible wave of growth and reaching the unicorn stage, many have started to ask when are the plans for IPO?

In fact, expectations for IPO in the near future has already sparked when the startup announced the appointment of Suresh Seshadri, former AppDynamics’ Vice President of Finance & Treasury as the Chief Financial Officer. Seshadri has previously helped prepare AppDyanmics for its IPO before it was acquired by Cisco in 2017,

“Coming on board to work with Girish and the rest of the executive team is an incredible opportunity and I am confident that we are well-positioned to reach the next phase of Freshworks’ expansion,” Seshadri said.

Freshworks CEO: Girish Marhrubootham

Image Source: VentureBeats.com

However, Freshworks CEO Girish Mathrubootham told TechCrunch we shouldn’t be holding our breath waiting for his company to IPO.

“Freshworks hasn’t started the IPO process but we do feel that we will eventually go public in the U.S.,” he said. “With that said, our primary focus right now is on growing the business and investing in our platform. When the timing is right, we’ll make that decision.”

At present, the startup will focus on expanding Freshworks’ worldwide expansion and continue investing in its integrated SaaS platform, especially at how it can use AI to bring innovations to its new tools.

“When we started Freshworks in 2010, we were a single-product company with a goal of offering better, easier-to-use customer service software than what was in the market,” said Girish.

“It’s been a long way but we’ve since scaled our company to US$100 million in annual recurring revenue and built a full SaaS platform where all of our products – such as Freshsales, Freshdesk, and Freshservice – work together seamlessly without requiring additional integration resources or consultants to make the software simply work,” he added.

First Coffee Unicorn of China: Luckin Coffee Raises US$200 million to take on Starbucks

China’s Luckin Coffee, a coffee franchise rivaling Starbucks had just closed a US$200 million Series A round from Singapore’s sovereign wealth fund GIC, China’s Legend Capital, Joy Capital, and Centurium Capital.

The funding round values Luckin at US$1 billion which makes it the newest Unicorn in China.

However, the scale of the capital and the fact that the round is labeled a Series A has been confusing because the company basically expanded overnight.

Founded by Jenny Qian, the former chief operating officer in Car Inc, Luckin Coffee started late last year.

Luckin Coffee has rapidly grown using a mass-store model and the company was soon found everywhere in China. It entered the market vigorously and expanded across China’s first and second-tier cities.

But in less than nine months after its launch, Luckin Coffee has opened 525 outlets across China’s major cities, in addition to offering on-demand delivery services in partnership with S.F. Express. Luckin Coffee will deliver for orders over RMB35 (US$5.30) within 30 minutes.

Besides, the coffee franchise selling point was clear, it positioned itself similarly to Starbucks. Both highlighting their freshly brewed coffee to be of high Arabica standards and made with professional blending.

Pricing-wise, Luckin Coffee is reasonably set between 20 to 30 yuan (about US$3 to US$5) which separates it from fast food coffees at McCafe or KFC that is 10 to 20 yuan (about US$2 or US$3), while being more attractive than Starbucks which sells at 30 to 40 yuan (about US$5 to US$6).

If that’s not enough to prove that it is a rival of Starbucks, the Chinese coffee chain has also opened fire on Starbucks, accusing the American coffee giant of engaging in monopolistic behavior and creating an unfair domestic trade market.

An act that Starbuck has called out as a publicity stunt.

Then again, Luckin is not a Starbucks copycat. The startup adds a technological touch making its coffee-shop model revolving around an app.

Luckin customers have to download the app to order and pay for their coffee. They do not accept cash and payments can only be made using WeChat or Luckin’s own coffee wallet. This breaks it out of the traditional retail mold, fitting it in with new retail trends like Alibaba and Tencent which partners with supermarket and convenience stores on mobile payments.

Similar to many other Chinese Internet-based startups, the startup has also been spending massively on cash discounts and promotions to gain market share. First-time customers can get a free cup of coffee, while their referrals can also get another free cup of coffee.

Despite the low prices and rising expansion project, the question is – how does the company justify its valuation and can it take on the coffee giant Starbucks?

Jeff Towson, an investment lecturer at Peking University in Beijing told Quartz, “Luckin Coffee can easily worth US$1 billion if it can execute on the business — but that’s a big if.”

He explains that a large part of Starbucks’ success is not just personalize marketing and coffee. China is Starbucks second largest market after the United States with more than 3300 stores in operation.

The coffee tycoon’s real leverage is with real estates whereby many of its stores are located strategically in expensive, high traffic locations that rivals cannot afford.

However, the startup uses app to draw people to less bustling locations that are cheaper to rent. This may be the solution to overcome the real estate power of the coffee tycoon.

Moving forward, Luckin Coffee plans to use the newly raised funds for product research, IT platform development, and business expansion.

Food Tech Startup Swiggy joins unicorn club, raises US$210 million from DST Global, Naspers

Food delivery continues to dominate the flow of big capital and investors in India’s startup ecosystem with Swiggy being the latest to enter the unicorn league.

The food delivery startup has successfully raised US$210 million in its latest round of funding from Russian billionaire Yuri Milner’s DST Global and existing backer Naspers.

DST Global is one of the world’s most influential tech investor which counts Facebook, Airbnb, and Alibaba in its investment portfolio. For DST, this will be its third investment in India after online retailer Flipkart in 2014 and cab hailing firm Ola in 2015.

The round also saw participation from US-based hedge fund Coatue Management and existing investor Meituan Dianping, a China-based provider of on-demand online services.

It is with this latest funding round that Swiggy’s valuation has increased to US$1.3 billion as per sources with direct knowledge of the development.

Besides, this also officiates the Bengaluru-based firm as one of the fastest internet companies to join the Unicorn club four years after it inception. That is less than half the time it took for its rival food tech company Zomato to earn the title.

The last valuation of Swiggy was at US$700 million in February when it raised US$100 million from Naspers and Meituan Dianping.

With this round, Swiggy’s existing capital will cross US$466 million, which is essential as it continues to compete with Ant Financial-backed Zomato and new competitor entering the space, which includes UberEats and Foodpanda.

Swiggy currently has 35,000 restaurant partners and 40,000 delivery executives across 15 cities. It will use the additional capital to ramp up its supply chain network, expand to new markets and scale its headcount especially in the technology function.

Sri Harsha Majety, the CEO of Swiggy explains, “using this investment, we will continue to widen Swiggy’s offering, along with bolstering our capabilities and plugging the gaps in the on-demand delivery ecosystem.”

Swiggy has also been reportedly looking to increase its supply by exploring investment options with cloud kitchen players and restaurants for its Swiggy Access model even as the firm is working on a pilot of medicine delivery under its offering Swiggy Dash.

If anything, this deal is expected to escalate the fierce competition in the food delivery space, and to an extent boost innovation of the services to grow beyond ride hailing.

According to a Bloomberg report, more than 400 food delivery apps were operational in India between 2013 and 2016. The industry grew by 150% year-on-year and has an estimated Gross Merchandise Value (GMV) of US$300 million in 2016.

At the same time, this sector has witnessed a lot of consolidation. While some ventures with unique ideas has managed to survive, others succumbed to market forces simply due to lack of bad timing or lack of funding.

Currently, the momentum in the food delivery market in India is lead by Swiggy with about 11 million monthly orders followed by Zomato at about 7 million orders across India and UAE. While FoodPanda records about 1 million and UberEats about 750k per month.

However, all is not fixed as in related news, Swiggy’s rival Zomato also raised a US$400 million funding capital, a news that came a few days after Swiggy’s own announcement of a US$210 fresh funding.

However undeniably, the food delivery industry is nearing saturation. Question is – who will come up on the top: Swiggy, Zomato or new entries like FoodPanda or UberEats?

Myanmar’s search technology startup Bindez secures six-digit USD round from Vulpes Investment

Singapore’s Vulpes Investment Management Pte Ltd (VIMIC) has announced an investment in Bindez, a search engine and discovery platform based in Yangon.

Following this funding, VIMIC’s adviser Rita Nguyen will also join Bindez’s board.

For Vulpes, this will be the company’s third equity investment in Myanmar after sealing two seed investments in logistic startup Kargo and online freelance job platform Chate Sat using its tech-focused VC fund .

“The potential for harnessing the great technology which Bindehas already built is massive and will be transformative in Myanmar’s emerging technology story. We are very excited to be part of their future growth,” said VIMIC.

Providing a localized solution, Bindez uses natural language processing and machine learning technologies for easy access to data and content which are created in Burmese.

The search technology startup currently owns two products:

    – Bindez Thadin: a B2C content discovery platform where people can access the latest Burmese news
    – Bindez Insights: a social media monitoring product that helps understand market trends and insights

Launched in 2014, the startup is also the first Myanmar startup to have raised a seed and angel investments from international investor 500 Startup.

Yewint Ko, the Co-founder of Bindez said, “Bindez is a mix of linguistic data and machine learning capabilities. It is helping brands to overcome long-time Burmese language issues.”

This includes font compatibility to better understand their customers and how their brand is being perceived online.

“Because of this, we are seeing a real demand for our products more so than ever before. This investment from VIMIC will allow us to scale up the business to meet this growing demand.”

The startup also claims to be the only social media listening tool specific to the Myanmar market, with its news aggregation app reaching a million downloads and 2 million page views per month.

Japanese startup Ambient Intelligence raises funding to develop submersible underwater drone

From aerial exploration used in construction sites to the commercial use of taking high-ground selfies, drones have been cited for its many applications up in the air until the arrival of this Japanese startup enter the drone scene.

Ambient Intelligence Technology, a startup developing and manufacturing submersible underwater drones, said that it has secured 190 million yen (about US$1.7 million) in its latest round led by Beyond Next Ventures.

The round which was intended to accelerate the company’s plan in developing business-use drones for maintaining and managing underwater infrastructure also saw participation from Mitsui Sumitomo Insurance Venture Capital, SMBC Venture Capital, and Freebit Investment.

Established in 2014 by Shohei Ito and Yasushi Nakauchi, Ambient Intelligence is focused on developing underwater drones, to solve the limitations for a human diving professional which can only reach the maximum depth of 40 meters. Any depths more than 40 meters and it will be required to use the Remotely Operated Vehicle (ROV) which can be complex and expensive.

To solve this, Ambient Intelligence looks to release Spider – an underwater drone product from the company next spring. It has eight thrusters and can be connected to a terminal on a mother vessel by a single tether cable.

Users can simply operate a gamepad for the drone to go down to a maximum depth of 300 meters. Its battery life last 4 hours and it has altitude control and computer vision-based position holding functions for the drone body which will allow users to easily monitor and research environment even in a strong water current area.

Despite there being little petroleum production in the country, the technology will become useful in Japan for the maintenance and management of underwater infrastructures such as dams and harbors.

It will also be easier to conduct surveys in environments where there is are tidal currents which have been difficult until now.

“Currently we are concentrating on expanding the underwater drone submerging to a depth of 300 meters with high market needs,” said Ambient Intelligence. “But in the future, we will develop products that can withstand the water depth of 1000 meters which will allow further exploration of the deep sea.”

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