Zenoti - An All-In-One Cloud-Based Solution That Entered the Unicorn Club

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An Indian start-up that rumbled its way to become India’s first-ever SaaS vertical unicorn.

Introduction:

The Bellevue and Hyderabad-based Zenoti, an all-in-one cloud platform, announced the closing of a $160 million Series D funding round which was led by the private equity firm Advent International through Advent Tech and Sunley House Capital, an affiliate of Advent on December 14th, 2020. 

Managing the beauty and wellness industry is a mammoth task which Zenoti, a software-as-a-service (SaaS) launched in 2010 has mastered. Zenoti has grown tremendously from a start-up to a company with an evaluation of more than $1 billion. It currently powers more than 12,000 businesses and serves over 1000 brands all over 50 countries and became India’s first-ever SaaS vertical unicorn.

Behind this success story, lies a man who was already well-experienced as a founder as he had demarcated his career at Microsoft for eight years. Later he went on to kickstart his own company which was known as ‘Intelliprep’ in the year 2000. 

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He was Mr. Sudheer Koneru from Hyderabad who was also an IIT Madras graduate. His start-up was acquired by ‘Click2Learn’ which Mr. Koneru had helped it grow up to $100 million in revenue. His ventures continued to a wellness chain called ‘Latitude Pro’. Only when he started managing and running this business did he realize that it was problematic.

His Journey to Success:

In 2010, he started the company ‘ManageMySpa’, headquartered in Hyderabad. His revenue was quite small but he managed to take the right strategic decisions at the right time. His first idea was to expand the business globally. 

They conducted a joint study and Mr. Sudheer and his team decided to reach out to the US market as there was a considerable opening for a product like ManageMySpa. 

When tackled with a huge market like the US, they thought it would be wise to go after the European market. Initially, their idea was to start small and expand it in the Indian market and South East Asian markets along with Australia. 

So, the plan to global worked out well as their management and Go-to-market (GTM) strategy which involved utilizing their inner and outer resources was unique and helped gain customers.



ManageMySpa shoots to Success:

ManageMySpa was brought to the attention of a Venture capital, Accel in 2014. They were the first institutional investor as a young associate, Abhinav Chaturvedi was impressed with their service. 

This venture capital fund gained them an opportunity to start in the US. The head of sales, Dheeraj Koneru, moved to the US within thirty days of their investment which was their first institutional cheque that helped their execution.

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ManageMySpa picked up a considerable pace in the US which led them to come up with sub-vertical markets which included barber shops, tanning services, nail salons, and so on. Here’s where their good thinking came into the picture because if they had their products built separately in the vertical market, they would not be able to address and grow in them. 

But soon they realized that it would be possible to do so because of their scalable product architecture. This was a golden opportunity for them to double up on many adjacencies. At this very time, in 2015, they changed the name of their company to Zenoti. 

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With a new brand that they had established and the progress they saw in the US market, Zenoti raised more assets from Norwest and later from Tiger Global.

Zenoti and Its flight to Success:

Currently, Zenoti claims to be the best software of choice for spa and salon chains as they had a hundred percent year-on-year growth in 2020. They have made huge investments in the Indian market including Kaya Skin, Enrich Salons, Blush Clinics, and O2 Spas. 

Zenoti also provisions a portfolio of several brands around the globe which includes Toni & Guy, Rush Hair & Beauty, Hand & Stone, European Wax Centre, and Hair Cuttery.

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Zenoti raised $6 million from Accel Partners in a Series A round in July 2015. This helped them establish a firm in Bellevue, Washington. It also managed to pick the pace up in sales and marketing on a global level. 

In 2014, the market for software solutions was valued at $9.5 billion and as of 2020, it is valued at $389.86 billion. So, they were aware of the growth of software both globally and in the Indian market. As the progress continued, Zenoti announced a $15 million Series B funding round on August 11th, 2016. 

They had to invest a lot into marketing at the start, especially in India. Despite the consistent solid service delivery, exceptional customer support, and thorough onboarding process, it was tough for people to adapt to a software solution. 

The marketing had to not only ensure for their product to grow but educate the people about cloud-based software solutions as well. This is the primary reason it did not grow as much in India as it grew in foreign markets.

The Other Factors of Influence:

They powered through these educational barriers and announced their $70 million Series C funding led by Tiger Global Management with Norwest Partners and Accel on May 1st, 2019. By then they had thousands of customers from across 44 countries. Finally, they led to the current position with $160 million Series D funding on December 14th due to which they reached the Unicorn club. 

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Zenoti is planning on investing $1 million monthly to partner with financial service providers which in turn provides insurance and other capabilities to these businesses as well as the customers. This would be a win-win as it would boost Zenoti. 

Conclusion:

With the right decision-making and planning abilities, Zenoti has seen a fantastic success rate and has been inspirational to several young entrepreneurs with its promising results.

Written By - Amulya Sriharsha 

Edited By - Daniel Deepak Charles