Cloud Customer Service Startup Freshdesk Reels In $50M Round

Freshdesk, a cloud-based customer service tool, caught a bushel of money today, announcing a $50M investment led by Tiger Global with Accel Partners and Google Capital also participating.

The funding comes on the heels of a $31M round last June and brings the total investment to just over $95M. The reason Freshdesk went back for more so soon, was that it has continued its phenomenal growth, and investors took the bait.

Freshdesk has been on a growth spurt, doubling the number of customers to 40,000 in the last year and increasing an impressive ten-fold over two years ago when it had just 4,000. As it’s added clients, it has required more employees, doubling the number from last year to 350 today, according to company president Dilawar Syed.

With $50M in new money, chances are it will be hiring a few more, but unlike many SaaS companies, Fresdesk isn’t burning through money building a costly sales and marketing organization. Instead the company focuses on SMBs (small to medium sized businesses) and uses in-bound marketing campaigns to keep costs down, Syed explained.

While he acknowledges that as the company grows, it will need to build a bigger in-house sales team, he seems to take pride in running lean and hopes to concentrate future investments on product development and support. This is a far different approach from the typical startup’s focus on bulking up sales and marketing with new funds.

Keeping It Lean

Freshdesk, which launched in 2010, has been built from the ground up as a cloud tool designed to work across a variety of channels including phone, web, email and chat, as well as social channels like Twitter and Facebook. Freshdesk helps manage and prioritize customer issues as they come in, and distributes them to appropriate customer service personnel.

Employees can organize inquiries using a set of filters such as by agent or priority. Administrators can configure the system to set a standard time for responding to a customer request, sometimes called a service level agreement (SLA).

Freshdesk is competing with the likes of Zendesk, which went public last year with a successful IPO, and, which offers a number of customer service tools aimed at SMBs and larger enterprises. Yet Syed didn’t seem terribly concerned about them.

He admitted that, while the three companies sometimes overlap, when it comes to Freshdesk’s core SMB market, it is usually competing against using email to interact with customers, as opposed to another customer service product.

It’s worth noting that both Zendesk and Salesforce offer products aimed at SMBs and were also built from the ground up as cloud services.

Looking For Bigger Fish To Fry

Judging from its customer list, it’s not just going after SMBs, and  Syed acknowledges it has set its sights on bigger customers too. In fact, customer examples listed on the company website include Cisco, Honda, 3M, Sony Pictures and Good Reads. In many cases, it may start with a presence in one department inside a large organization, and then try to expand to other departments, as opposed to attempting a company-wide sales approach, Syed explained.

As Freshdesk has grown rapidly, Syed admits he worries about managing the large number of new customers, while on-boarding new employees, but he has a plan for the company and so far he has been able to execute it to continue growing.

He says one of the reasons it has worked so well to this point is the simplicity of the product, which he claims allows the company to get new customers up and running quickly without consultants or third parties.

As for the future, he wouldn’t even touch the idea of going public at some point, saying it was too soon to say. He was reluctant to even project how many employees he might have by next year, but said it’s entirely possible it could double again.

For now, Freshdesk is growing without the kind of burn rate we are used to seeing from SaaS companies. If it can continue its current trajectory, while keeping the sharks at bay, the rest will surely take care of itself.