Cloud-based business software provider Freshworks on Tuesday announced the acquisition of Zarget, a marketing software startup that provides marketers and designers with a suite of conversion rate optimisation (CRO) tools that helps them understand how users interact with their websites. The terms of the acquisition including the amount was, however, not disclosed.
This is the ninth acquisition by Freshworks over the last two years. The company believes that Zarget will help it focus on building marketing solutions for businesses of all sizes.
Story so far
Zarget was founded in 2015 by Arvind Parthiban, Naveen Venkat and Santosh Kumar with an angel investment from Freshworks founder Girish Mathrubootham and some of the early Freshdesk employees, who were friends of the Zarget founders. Over the next two years, Zarget went on to raise $7.5 million across two rounds of funding ($6M, $1.5M) from Accel Partners, Matrix Partners India and Sequoia Capital India.
Freshworks noted that as part of the deal, the angel investors received only their initial investments back, to avoid any conflict of interest. Freshworks declined to comment on the acquisition amount but a company spokesperson told YourStory that all institutional investors will get Freshworks shares in lieu of their Zarget shares.
Zarget’s CRO tools aims to help businesses increase orders, customer interactions and signups on their website by providing user metrics and data driven insights. Marketers can take informed decisions based on the insights gained through A/B Testing, heatmaps, session recording, polls, feedback and other features.
Through this acquisition, Freshworks seeks to further develop Zarget’s marketing suite and provide the team with expertise, technology and operations as well as access to over 100,000 customers of Freshworks Inc, the parent company behind the suite of products.
Founded in October 2010, Freshworks is backed by Accel, Tiger Global Management, CapitalG, and Sequoia Capital India. Sequoia Capital India was a common investor across Freshworks and Zarget.
As a leading provider of cloud-based customer engagement software, Freshdesk’s suite of products include:
- Freshdesk: A cloud-based software solution that allows organisations to support customers through email, phone, websites, forums, and social media.
- Freshservice: A cloud-based service desk and IT service management solution.
- Freshcaller: Call center software for small teams.
- Freshsales: A CRM solution and sales system for high-velocity sales teams.
- Freshteam- An applicant tracking software.
On being asked if Zarget will continue functioning as a separate entity for some time or will be absorbed into one of the five verticals of Freshworks, a spokesperson told YourStory,
We will integrate Zarget into Freshworks and build a new product in the marketing software domain.
Freshworks has its headquarters in San Bruno, California and global offices in India, UK, Australia, and Germany. The company's cloud-based suite of SaaS products is widely used by over 100,000 customers around the world including Honda, Bridgestone, Hugo Boss, University of Pennsylvania, Toshiba and Cisco.
Girish, CEO & Founder of Freshworks, noted that Freshworks’ ambition is to emerge as the default cloud-based business software platform for businesses of all sizes. A growing number of their customers had been asking them to help in their marketing initiatives, which led them to Zarget. In a statement, Girish explained the thought process behind the acquisition saying,
Today, our software powers customer engagement across every aspect of the customer journey, from customer acquisition to customer support. Acquiring Zarget will enable Freshworks to support customers with the pre-acquisition journey as well and truly transform the way our customers attract and engage with their prospective customers. Also, I have known the Zarget team for many years and I am personally thrilled to have them join the Freshworks family and power our expansion into the marketing software category.
Sector overview and future plans
According to Gartner, marketing leaders allocate 27 percent of their expense budget to technology, equal to 3.24 percent of overall revenue, compared with the CIO technology spend of 3.4 percent of revenue. Gartner predicts that CMOs will spend more on technology than CIOs by the end of 2017, further underlining the opportunity for marketing software and technology vendors.
Arvind Parthiban, CEO of Zarget, remarked,
We built Zarget to help marketers make informed decisions on their online properties without the need for deep technical resources or large budgets. Together with Freshworks, we expect to accelerate the digital marketing evolution and help our customers further transform the way they market with combined expertise and solutions.
Talking about implications, Freshworks clarified that there will be no impact on Zarget customers and Freshworks will continue to support them. A Freshworks spokesperson also confirmed that 43 Zarget employees had been absorbed into Freshworks while some of the remaining employees have moved on to other companies, some have left due to personal reasons and a few are looking out for other opportunities.
Freshworks had announced the acquisition of Joe Hukum last month and with the addition of Zarget, the company aims to continue focusing on building a suite of SaaS products following its rebrand from Freshdesk earlier this year.