Sequoia Buys The Dip, Picks Up $94.8 Mn Worth Of Freshworks’ Shares

Venture Capital firm Sequoia India has picked up $94.8 Mn worth of Freshworks’ shares.

In total, approximately 5.48 Mn shares of the Chennai-based SaaS giant were picked up by the Indian arm of the VC firm.

The announcement helped Freshworks rally nearly 10% on the Nasdaq stock exchange. Post the intra-day trading on Wednesday, the stock closed at $18.52, up $1.59 with a market cap of $5.2 Bn.

It is pertinent to note that Sequoia India holds 10% stake in the SaaS startup. According to the VC firm’s SEC filings, it picked up the stock in the price range of $16.46–18.

Founded in 2010 by Girish Mathrubootham and Shan Krishnasamy, Freshworks offers a suite of softwares for customer management. This includes an AI-powered chatbot and messaging platform for customer support, as well as call centre-based solutions for customer service resolutions.

The SaaS giant was listed on the Nasdaq last year in September with an opening price of $43.5. This was well above the set price of $36 per share.

Following its great performance, the startup peaked at $53.36 and has since tanked to as low as $15.60. 

Freshworks’ bumper listing had helped it achieve a market cap of over $13 Bn, but the recent sell-off has eroded its market capitalisation to roughly about $5.2 Bn. But what led to it?

The tumble was triggered by an overall market volatility among U.S tech stocks. The ongoing war between Ukraine and Russia has not helped either and has pulled down the valuation of many tech companies. In addition, rising interest rates, high inflation, and rising Treasury-bond yields have further contributed to Freshowrks stocks being in doldrums.

Despite better than expected numbers, the company stock plummeted after releasing its Q4 numbers. The sell-off led to Freshworks’ stock settling at nearly a third of its record high.

In its Q4 results, Freshworks had reported a net loss of $74 Mn, compared to $1.5 Mn in the same quarter last year. Loss from operations also stood at $56.4 Mn in Q4, compared to $3.4 Mn during the same period last year. However, revenue soared by nearly 49% to $371 Mn during the intervening period.

Bengaluru-based SaaS startup, Capillary Technologies, is also planning IPO this year. The startup filed its draft red herring prospectus (DRHP) with the market regulator SEBI last December and plans to raise INR 850 Cr via a public listing.

This comes amidst a bullish run by Indian SaaS startups. The Indian enterprisetech sector raised over $3.2 Bn in investments last year. Add to this, India houses as many as 16 unicorns in this space. 

Continuing well into 2022, the segment has witnessed big funding flowing in. Earlier last month, subscription management unicorn, Chargebee, doubled its valuation to $3.5 Bn after a $250 Mn funding round led by Tiger Global and Sequoia Capital.

Barely a day ago, media-focused SaaS startup Amagi became the 11th unicorn of the year after raising $95 Mn in a funding round led by Accel.