Freshdesk offers a whiff of fresh air from the Indian SaaS space

21 Jun, 2012

Early this year, the founders of the US and India-based SaaS-based customer support startup Freshdesk Inc were in a big dilemma although elated. Even in a cash-strapped environment, as many as eight investors were ready to invest in the company at a multi-million dollar valuation, but the founders were not sure whether to take the money and from whom to take it.

For Freshdesk had raised Series A funding of $1 million from Accel Partners only a few months ago, which was also hotly bid by three or four venture capital firms. Finally, in April this year, they accepted $5 million in Series B funding from the existing investor Accel Partners, and who else, but Tiger Global Management, another large Internet investor in India (Also see The believers: Top 5 investors in Indian Internet biz).

"We didn't need the money at least for another year since we were freshly funded. But we saw a lot of interest from investors and thought of taking it up to see if we can get a forward-looking valuation for an early second round," said Girish Mathrubootham, co-founder and CEO of Freshdesk.

What helped Freshdesk arouse a lot of interest in venture capital investors over the past year? It had something to do with how SaaS (software as a service) was becoming a new way of consuming software by companies via internet. In other words, on-demand software applications delivered via Internet for a moderate subscription fee has been making global waves, as they help SMEs reduce software costs as against expensive one-time installations. According to IT research firm Gartner, SaaS revenues are expected to reach $21 billion by 2015 as against $12 billion currently.

Gaining traction

Freshdesk offers an on-demand customer support software and provides services like multi-channel social support (e-mail, website and social networks like Twitter and Facebook) for businesses. Unlike traditional BPOs, the company has tweaked the age-old concept of customer support helpdesk and made it a tool for marketing and branding, driven by an insight into customer satisfaction.

Moreover, it's on the Cloud, inexpensive, can be set up within a few minutes and can be operated from anywhere. That means one can assist his customers 24x7 without being desk-bound. Finally, what you get is pretty interesting as businesses can combine the backend help desk system (for ticketing, information-sharing, etc.) with an online customer portal (self-service, forums, idea management, voting, etc.), along with a knowledge base and a customer community platform.

The company has secured reasonable traction with more than 1,000 global customers from 50 countries, of whom more than 50 per cent are paid subscribers. Its global rival, Denmark-based Zendesk, has 15,000 customers, according to its website, and has reportedly attracted funding to the tune of $26 million.

Taking on the bigwigs

Freshdesk was founded in 2010 by Girish Mathrubootham and Shan Krishnasamy (currently the CTO). Mathrubootham, who holds an MBA degree from the University of Madras and has industry experience of more than a decade, had earlier worked with Zoho Corporation where he was the vice-president for product management. At Zoho, he met Shamugann Krishnasamy who was working as a technical architect at that time. Krishnasamy is an engineering graduate from Thanthai Periyar Government Institute of Technology, Vellore.

The duo decided to build Freshdesk to offer a better product than Zendesk (at lesser cost, of course) and the initial push to the idea was to compete. One differentiating factor for Freshdesk is its support system via social media platforms. As more and more customers prefer using social media instead of traditional channels like phone and e-mail, this is expected to gain traction.

For instance, the company recently introduced a feature called private customer support on Facebook, which essentially means customer feedback on Facebook can be directly forwarded to private messaging. Freshdesk claims to be the only company offering this facility even though it's replicable.

Then comes the pricing part, one of the main premises on which the firm was started. Zendesk's basic plan costs $24/per agent/ per month, compared to $9/per agent/per month charged by Freshdesk at the bottom end.

Freshdesk also plans to add Cloud telephony to its services. "Today, when a customer calls, an agent has to fill in specific information about him/her and submit a ticket. But with the enhanced, integrated Cloud telephony feature, the entire call will be recorded, transcribed and added, and a ticket will be auto-generated," he explained.

However, Freshdesk is in a crowded market with many companies like SupportBee, Santiago, Desksatisfaction, Kayako, ZoHo and Webklipper (since it is also a customer engagement platform) offering customer service on a SaaS model. Not to forget its global counterpart, Zendesk, who was engaged in a war of words with Freshdesk, calling it a rip-off.

But SaaS is here to stay and winners will have a windfall. "If you're a private company in the SaaS market, you're golden," Martin Wolf, the founder and president of the mid-market IT services M&A advisory firm Martin Wolf Securities, told a news website in January 2012. He was hinting at several SaaS acquisitions done by large IT companies like Oracle and SAP at higher revenue multiples.

Can Freshdesk make it? For now, it offers a whiff of fresh air from the Indian SaaS space.

(Edited by Sanghamitra Mandal)