Zenoti, a cloud software provider for the spa, salon, and med spa industries, has raised $160 million in Series D funding at a valuation of over $1 billion.
The funding round was led by Advent International, a US-based private equity firm. Existing investors Tiger Global and Steadview Partners also participated in the round. Till now, the startup raised a total of $250 million in funding.
Bellevue, Washington and Hyderabad-based Zenoti turns out to be the fifth software product company of Indian origin to enter the unicorn club. Earlier, Freshworks, Druva, Icertis and Postman made it to the club.
Zenoti said its software powers over 12,000 businesses across 50 countries, offering mobile-first solutions for appointment scheduling, self-check-in, payments, employee management and even inventory tracking. The company said it has seen strong growth during 2020, pushed by businesses upgrading their software during the Covid-19 pandemic.
“We got really good traction in the US. This year we’ve grown by more than 100% and feel that next year also we’re on track to grow by at least 100%. Our actual board commitment is something like 120% growth for next year,” said Sudheer Koneru, founder and CEO at Zenoti, without commenting on the firm’s revenue.
Zenoti said it will utilise the fresh capital to continue to scale its operations and invest in R&D for innovations using AI and smart algorithms that will help its customers in better inventory management, customer scheduling, marketing and dynamic pricing. It also said that the funds will be used for inorganic growth through acquisitions.
“We felt we could use the money for R&D, getting into new verticals (pet spas, group classes) and also for M&A purposes. We see a lot of players struggling right now, and it’s getting worse so maybe there will be an industry consolidation of sorts and we will be in the driver’s seat,” added Koneru.
“The wellness industry is ripe for disruption, particularly as Covid-19 has made it more important than ever to eliminate unnecessary face-to-face interactions wherever possible,” said Eric Wei, Managing Director on Advent’s technology team in Palo Alto.
The US market drives 60% of Zenoti’s business, followed by the UK which accounts for almost 20% of the company’s new bookings and Australia and New Zealand in the third spot. In India and West Asia, while some of the largest salon and spa chains use Zenoti’s software in terms of new bookings, they lag behind western markets.
“Zenoti’s rise to become a billion-dollar SaaS company along with the few others before it is a great analogy to inspire more entrepreneurs to start building software product companies,” according to Shekhar Kirani, Partner at Accel, which was an early backer of Zenoti. For him, India can become for SaaS what IT Services did two decades ago.
“Now there’s a product mindset and the way the ecosystem has come together and is paying it forward is something you’ll not see in any other sector in India. Every founder wants to help another founder, you don’t get that in the consumer sector,” said Kirani. “Also worldwide, customers have changed. They don’t care where a product is built, as long as it is good.”
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