ADVERTISEMENT

Zenoti is making the SaaS sector much more competitive than you think
Z

Zenoti, a vertical SaaS Unicorn, is making progress, how you may ask? We might never know. The fact that the company is now in the top five SaaS ventures in India and the top nine in the world shows a lot about what this start-up has pulled off in recent times where being unique is lucrative, or otherwise, it is a do or dies matter. After acquiring enough funds and ore incoming, the start-up wants to progress and take over smaller competitors to enlarge its market in a span of the next two to three years.

Hundreds of founders and some of the world’s elite venture capitalists came to Chennai, India, for a historic meeting of minds in late January 2020, just before the global economic unraveling now faced by start-ups everywhere. SaaSBooMi 2020 was sponsored by major global investors, including Accel, which recently closed a 550 million dollar funding in India, Sequoia Capital and Tiger Global Management, and Amazon Web Services and Microsoft sixth so far. The topic of debate: the state of Indian SaaS. The event was more timely and relevant than its participants knew then. As the global industry adapts to a post-Covid environment defined by rapid digital adoption and increased cost-consciousness, Indian SaaS businesses are poised for titanic growth in the coming years.

More Indian start-ups will be building products for the domestic market over the next decade and simultaneously tackling the global market. The country’s start-up ecosystem is mature enough to support ventures’ global aspirations regarding capital and technical talent availability. SaaS has witnessed significant working capital momentum in the past two years and will continue to gain investor focus. Investments in these businesses have increased by 20 percent, from 670 million dollars in the first half of 2019 to 830 million dollars in the first half of 2020. Zenoti, a start-up software-as-a-service catering to the beauty and wellness industry, raised 160 million dollars with a valuation of over 1 billion dollars in a Series D funding round. Advent International led the round while existing investors Tiger Global and Steadview Partners also took part in it.

With this, Zenoti becomes the fifth Indian start-up based on SaaS to become a unicorn, with Zoho, Freshworks, Druva, and Icertis being the previous ones. Do you what’s common among these start-up brands? These found their biggest customer base in the United States. Zenoti, based in Hyderabad and Bellevue, Washington, offers cloud-based software solutions for the spa, salon, and medspa industry, and its customers include more than 12000 outlets in 50 countries. The start-up now aims to fuel Artificial Intelligence-led innovations with the latest investment while also scaling up operations. The organization also aims to recruit new staff to double its headcount to 900 from the current 550 by 2022. In the Deloitte Technology Fast 500, ranked among the 500 fastest growing technology, media, telecommunications, life sciences, and energy tech companies in North America, the 10-year-old start-up was ranked at 316.

Changing the SaaS Game

Zenoti started its journey in India. Their all-star tech group had developed a cloud management solution for the health and wellness industries. The start-up platform allows customers after their appointment to pay directly from a mobile app. It also highlights the salon of the entry of consumer that uses the app and notifies them of the necessary info as provided in the booking. Zenoti allows its customers to accept bookings, accept digital payments, manage payroll, manage back-end inventory, and transfer tips directly from customers to a staff member’s bank account. The start-up was established in 2010, but it wasn’t until 2012 when this complete stack was built and entered. The Zenoti platform combines the tools of both ERP and CRM. And this is what this industry, which was surprisingly underserved before the entry of Zenoti, was doing (1). 

Early on, it became very clear that Zenoti could pursue clients beyond India. That early bet proved right for the start-up, for which the salon consumers in the United States provide for 60 percent of the income, followed by the United Kingdom. Zenoti’s software creation is so huge today, and it is used today by more than 12000 companies, including Hand & Stone and Gene Juarez, in more than fifty countries. Accel was the first investor to invest at Zenoti once they felt that the start-up could grow bigger with its unique software set up. The start-up works with higher-end companies and actuaries to assimilate data and all such info that a usual spa and salon would require to organize their databases. The spa and salon industry needed a player who just looked at solving the problems they were facing, unlike offerings from companies such as Microsoft and Notion, such as those that have built horizontal services that people use across the industries, and that’s what Zenoti tackled successfully.

 

Aspirations and Goals for Zenoti

Earlier in 2019, a salon company named “Hair Cuttery Family of Brands” had entered into a coalition with Zenoti. The company was the United States’ largest private chain of hair salons operating in more than 500 locations. As their salon management software solution, Hair Cuttery Family of Brands moved from its former point-of-sale software to Zenoti, making the transition in two months to more than 500 locations. To reduce high operating costs, the multi-center salon brand wanted an all-in-one software solution. Delivery of Zenoti, designed for multi-center brands. The coalition was due to the need for a wide range of software management solutions; the Hair Cuttery Brand Family experienced high IT infrastructure costs and thus had to find a way out to ensure that they continue running with the same goodwill that they hand in the mind of the consumer (2). 

Moreover, the communication wasn’t as effective due to the immediate coalition. Thus, the system and the set-up provisions for both companies had to be as quick as possible. The Hair Cuttery Family of Brands chose Zenoti to reduce costs by consolidating software solutions and integrating them seamlessly with their accounting and inventory management systems. Zenoti’s advanced solutions enable the Hair Cuttery Family of Brands to manage a single software system for customers, from guest profiles to point-of-sale experiences. Hair Cuttery Family of Brands relied on custom-built solutions for payroll calculations, inventory, and online booking before partnering with Zenoti. You could say that with all these features, Zenoti was aiming to break that threshold of an all-in-one software.

The start-up’s further partnership involves RUSH, a spa and salon group that wanted an advanced salon management system, and that’s what Zenoti provided them. The RUSH management could easily access key reporting on one platform across all their franchise locations and franchisee-owned businesses as well with Zenoti. Fully supported by the Zenoti application, the seamless integration of accounting and other internal systems enables the RUSH management to compare service and product revenue by location, flagging success, and improvement areas. The marketing automation solutions of Zenoti allow RUSH management to generate relevant customer messages while maintaining location-by-location flexibility. By engaging proper deliverance of the right message to the right client at the right moment through Zenoti Smart Marketing, RUSH can drive business performance. Such messages can be addressed to individual locations, increasing the significance of special promotions, and improving outcomes (3). 

 

Funding and Valuation

Zenoti just reeled in a 160 million dollar Series D round, which helped the start-up enable a proper set-up for its enterprise software product, which is now used by more than 12000 spas and salons and other wellness companies worldwide (4). The Washington based start-up, which this king of funding, has successfully joined an elite group of start-ups in the Seattle area valued at over 1 billion dollars. Years ago, co-founder and CEO Sudheer Koneru spent more than seven years at Microsoft as a director and product unit manager within the Microsoft Windows division. He went on to launch an e-learning start-up that eventually became SumTotal Systems, an HR software company. Koneru teamed up with Dheeraj Koneru, his brother, another longtime leader in the tech industry and former Microsoft employee. The pair sold their spa and salon company stakes and launched Zenoti, betting on a much bigger chance (5). 

The mindset that pushed them to take the greater leap is what the world sees today, a start-up that paved the way to be recognized as a boss player across many spa and salon companies worldwide. Zenoti now serves chains that use its software for everything from scheduling to payments to inventory, including European Wax Center, Hand & Stone, Massage Heights, Toni&Guy, Gene Juarez, and more. By charging a subscription fee per store, the company creates revenue; it also has a fast-growing arm for payments (6). This year, revenue had doubled, and in 2021, it is expected to grow by 120 percent. Koneru estimates the total market opportunity at around 14 billion dollars. Zenoti is looking for a big chunk of that to own. Most of its rivals offer desktop-based solutions or options for single-store like Vagaro, Fresha, Mindbody, and others that sell software to salons and spas. 

Five hundred fifty people are employed by Zenoti, with around 100 in the Seattle region and almost 400 in India. This year, the company had to increase turnover due to the pandemic that struck their finances. The total funding is at 250 million dollars to date. As a Bellevue based start-up, the start-up ranks in the top 20 of the best start-ups off the Geekwire 200 Pacific-northwest list (7). According to GeekWire’s tally, investors still funded around 1.1 billion dollars in over 65 deals during the third quarter, derived from our running list of Pacific Northwest start-up investments. Funding totals from July and August had eclipsed the levels of last year. For Seattle and the wider Pacific Northwest start-up ecosystem, the investment activity follows a strong first half of 2020.

 

Sudheer Koneru: Valuing brand more than ever

As a start-up initiator, Sudheer Koneru (8) has had a lot to tell about how life goes as a start-up entrepreneur. A company that supported the wellness industry looks beyond for the benefit of the industry itself. Sudheer believes that one shouldn’t go to the customer but let them come to you, but out of interest. The agreement that made Zenoti the newest Indian unicorn is also a sign of the frenzy in the software-as-a-service or known as the SaaS (9) sector, where start-ups raise funds 20 to 30 times their income at a valuation. This boom has benefited Zenoti, too. Since mid-2019 alone, more than 200 million dollars had come from 250 million they had raised since 2011.

 

Achievements and growth

Zenoti has made several record-breaking moments for itself in the past two years, and it just goes on to continue and grow even bigger. Even though they don’t disclose their Annual recurring revenue, Sudheer says that they grew to 100 percent of their ARR last year and hope to continue this year as well (10). The 160 million dollars Series-D funding just catapulted the company to the top five SaaS start-ups in India and the ninth start-up to achieve this year’s over one billion dollars valuation. Cars24, Razorpay, Unacademy, Zerodha, Postman, Nykaa, FirstCry, and Pine Labs are the others that made it to the coveted club.

The recent funding has brought the total capital raised to 250 million dollars for the 10-year-old company. The company also plans to use the invested funds to expand its operations across Europe and South American markets. Zenoti is also allegedly looking to acquire smaller competitors to grow inorganically and increase the acquisition of customers. The company is looking to buy two to three companies to enter new physical therapy, fitness, and pet spas over the next fiscal period. By 2022, the company, which has 70 percent of its workforce or nearly 400 employees stationed in India, aims to double its staff count to 900. About 60 percent of Zenoti’s business comes from the US market, followed by the UK, which accounts for nearly 20 percent of new bookings. Australia and New Zealand are other top markets, while India and West Asia are still emerging markets.

+ posts

Disclaimer: The views, thoughts, and opinions expressed in the article have been curated for our audience and does not warrant a 100% accuracy. All the information mentioned in the article is subject to change according to the changing viewpoints. Feel free to reach us at [email protected] for any change or copyright issues.

Note: If you buy something via a link on this page, we might earn a small commission on it.

Leave A Reply

Please enter your comment!
Please enter your name here

related stories

From post-workout beer to cars as a new personal space, these trends offer businesses a wide range of capitalization opportunities to explore.

Emerging Trends: Performance Beer, Digital Decor, and Cars, a New Personal Space

0
Post-workout Beer As per Keywords Everywhere, thousands of people are searching for 'drink beer post workout' monthly. It has fermented a new class of post-workout...
With easy internet access and high smartphone penetrations, there has been a shift in rural customers' aspirations opening opportunities for marketers.

Rural Marketing in the Post-COVID Era: A Lucrative Space

0
There has been a gradual evolution in rural marketing for the past few decades. Since most of the Indian population resides in rural areas,...

Challenges in Indian Startup Ecosystem

0
The Land Accelerator South Asia 2021 The Land Accelerator is a four-month curated program focused on training and supporting entrepreneurs working to restore land, forests,...
The idle minds and empty hands are using more devices, apps, and postures in the lockdown. We are here for a 30 billion USD industry booming around that.

Sextech: A Booming Billionaire Dollar Industry

0
Sex has always been a shady space in India. For a culture that takes price in Mind Control, Yoga, and worshiping saints, sex has...
Midea is facing the same fate as many Chinese corporations, asking for funding, going the old-fashioned way, through Kickstarter like Indiegogo.

Midea looks forward towards better development through crowdfunding, what could this mean for the...

0
Midea is a multinational technology company specializing in HVAC systems, consumer electronics, robotics, and industrial automation, and the digital market. (1) Midea provides a...
Amazon won the fight against labor organizing at its Bessemer, Alabama, warehouse on Friday, with employees opposing the Retail, Wholesale, and Department Store Union 2-to-1.

Will Amazon continue to live the bad light amongst its workers?

0
The COVID-19 pandemic has wreaked havoc on cultures and economies all over the globe. However, Amazon.com, Inc. has increased, cementing its status as the...
There has also been a boon for retail investors seeking profit and reliable trading platforms. Here are the top Robinhood alternatives in India.

Top Robinhood Alternatives in India

0
India's new trader breed had light-up Dalal Street in 2020. It was the year when many people across the globe were forced to stay...

Trending: Crypto College Loans, Viridian Vibes, and Bananatex Going Bananas

0
Students Going Crypto A group of students and advisers from several universities collaborated to built Student Coin in 2018 (1). It is a blockchain framework designed to...
ADVERTISEMENT