Freshworks to acquire Israeli startup Torii to help companies control AI costs
The acquisition will extend Freshservice into software management and AI spending oversight. Torii has raised $65 million since its founding in 2017 and helps companies track applications, licenses and AI consumption.
Torii, an Israeli software company that developed a platform for the automated management of enterprise software, has signed a definitive agreement to be acquired by U.S. software company Freshworks. The financial terms were not disclosed, although the deal is estimated to be relatively small. Freshworks is listed on Nasdaq and employs approximately 4,500 people.
Founded in 2017 by Haramati, Tal Bereznitskey, Uri Haramati, and Uri Nativ, Torii developed a platform that helps organizations identify the software and cloud services their employees use, manage licenses and subscriptions, reduce costs and control access. The system addresses the phenomenon known as “shadow IT,” in which employees or departments use software without formal oversight from the IT department.
The acquisition will extend Freshworks’ Freshservice platform into software management and AI spending governance. Freshservice is an IT service management platform, while Torii adds tools for monitoring software usage, managing licenses and tracking spending on software and AI tools. The companies say the combination will give organizations a centralized view of their technology inventory, usage and spending, rather than requiring them to rely on separate systems.
One of Torii’s key capabilities is tracking AI consumption at the token level, attributing usage to individual employees and teams, and forecasting future costs. The platform can help companies allocate AI expenses to the departments using the tools, establish spending limits and identify unusual increases before they become significant. The system is also designed to help organizations reduce unnecessary software spending and address security and data risks associated with unmanaged applications.
In a post announcing the deal, Haramati said that when he and his co-founders launched Torii in 2017, they identified a growing problem: companies were accumulating software services faster than their IT teams could track them, while lacking a comprehensive view of which tools were being used, who was using them and how much they cost. He said that many investors and industry professionals initially did not consider enterprise software management a distinct category.
Dennis Woodside, CEO and president of Freshworks, said in the company’s announcement: “Modern IT teams are being asked to govern more of the business than ever, with less visibility into what it costs. Freshservice already gives IT one place to see everything they run. With Torii, that same view now extends to software and AI spend, what's running, who's using it, and what it costs, so finance and IT stop reconciling spreadsheets and start making decisions together. As AI moves from experiment to infrastructure, Freshservice is how modern IT can govern it at scale.”
Haramati said the acquisition would help address the fragmented view of software and AI usage across IT, finance and security teams. “AI and the software behind it are changing how every team works, and most CIOs still can't see it, let alone control it,” he said. “We built Torii because IT, finance, and security were each working off a different partial picture of the same problem. Freshservice already gives IT one system of record for everything it runs. Extending that to software and AI means one less blind spot, not one more dashboard.”
The acquisition is expected to close in Freshworks’ fourth fiscal quarter of 2026, subject to customary closing conditions. Until the transaction is completed, the two companies will continue operating independently. Torii said customers should not expect immediate changes to their existing integrations, workflows, support contacts, contract terms or product development plans.
Torii has raised $65 million in funding. In May 2019, it announced a $3.5 million Seed round led by Uncork Capital, with participation from Global Founders Capital and Entrée Capital. In February 2021, it raised $10 million in a Series A round led by Wing Venture Capital, bringing its reported funding total to $15 million. At the time, the company said it planned to expand its engineering and data science teams in Israel and its commercial operations in the United States.
In February 2022, Torii raised a $50 million Series B round led by Tiger Global Management, with participation from existing investors, bringing its total funding to $65 million. The company did not disclose its valuation at the time but said it had increased significantly compared with the previous round.
In June 2023, Torii announced that it was laying off 28 employees, approximately 30% of its workforce, which then numbered around 95. Reports at the time said eight of the affected employees were based in Israel, with the remainder in the United States. The company attributed the cuts to missing its revenue targets for the first half of the year, citing economic uncertainty that had also affected its customers. It said projected full-year revenue would fall short of initial expectations and that it was restructuring to reduce costs and move toward profitability.
