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1Mby1M Deal Radar 2013: Freshdesk, Chennai, India

Posted on Thursday, Oct 10th 2013

Freshdesk is a SaaS company that provides customer support software across multiple communication channels. The software combines a back-end helpdesk system used in ticketing and knowledge management with an online social customer portal on the front end. Within two years of its launch as a cost-effective alternative, in 2013 Freshdesk has crossed $1 million in revenue and has over 10,000 customers in over 180 countries.

Freshdesk was founded in 2010 by CEO, Girish Mathrubootham and CTO, Shan Krishnasamy. Before starting Freshdesk, Mathrubootham worked as a vice-president of product management and Krishnasamy as a technical architect for the Manage Engine division of Zoho Corporation. The idea for Freshdesk came from the indignant reaction to an exponential price rise by Zendesk, a major player in the space. Mathrubootham sensed a market for a company that could provide good quality customer support solutions at reasonable prices. Deciding to take advantage of the opportunity, he founded Freshdesk in 2010, funding it with his own savings. The company also raised funds from friends for their launch.

Within a week of the launch in June 2011, Freshdesk had five paying customers and 100 in almost exactly their first 100 days. Over 500 small/medium businesses signed up after reading their launch story on Hacker News. Freshdesk also won the Microsoft Bizspark Challenge, which validated their idea and business model, and set the stage for further investment rounds.

Freshdesk’s initial focus was providing an affordable alternative to the small and medium businesses. Currently, the company targets any business that cares about its customers and the US is its primary market. It has over 10,000 customers with most of them from the IT/ITES space.

Freshdesk typically sees traction from industries where customers tend to be more vocal. Education and retail/ e-commerce are other key potential verticals. Its customers vary in size but some of the more recognizable names are Pearson, Stanford Medical College, Goodreads, MakeMyTrip, WHO (UNAID), Norway Postal Department, Enterprise Holdings, and Belgium Postal Department.

Freshdesk follows the Freemium pricing model. While it offers a free plan for small businesses (up to 3 agents), the paid tiers kick in for larger companies depending on the number or agents and the extent of required support. For example, for businesses wanting go proactive with support, it offers the Blossom plan at $16/agent (from the 4th agent onwards). For businesses that are growing and diverging into multiple products, it offers the Garden plan at $25/agent. The Estate plan ($40/agent) is for larger enterprises looking at providing a personalized support experience.

Mathrubootham said he uses a bottom-up total addressable market (TAM), and based on a set of pricing model assumptions (average $12-19 per user per month) and the growing market, estimates the TAM to be between $1 billion and $2 billion.

While Freshdesk began by bootstrapping the firm, in 2011, the company won the 2011 Microsoft India Startup Challenge grant of $40,000. This was followed by Series A funding of $1 million from Accel Partners in February 2012. Subsequently, they have raised another $5 million from Accel and Tiger Global in April 2012.

Mathrubootham says the company plans to stick to its proven growth strategy: affordable pricing and constant product innovation. In addition, Freshdesk is also looking at ways to continue penetrating into identified markets through inbound marketing with a focus on SEO, SEM, email marketing and directed content strategy. Growing partnerships through resellers, distributors, business development and strategic product partners are also on the cards.

Regarding an exit strategy, Mathrubootham says, “We’re in this for the long term, and our goal is to take the company public.”

Freshdesk is an early member of the 1M/1M program, and a success story that we’re proud of.

This segment is a part in the series : 1Mby1M Deal Radar 2013

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