India's Zenoti gets Series D extension, hits $1.5b valuation

The investment values Zenoti at $1.5 billion. The company achieved unicorn status last December on raising $160 million in the first tranche of the Series D, which was led by Advent International.

India’s software-as-a-service (SaaS) industry is seeing increased traction, largely driven by start-ups that are founded by local entrepreneurs who are based in – or soon relocate to – the US, because they primarily serve US clients. Domestic GP Iron Pillar estimated in February that 26 of India’s 59 technology unicorns are SaaS providers that hit big by targeting global markets.

Since then, there have been several additions to India’s blessing of unicorns and assorted up-rounds for smaller players.

Chargebee received $125 million in Series G funding at a valuation of $1.4 billion in April and then last month Zeta received $250 million, also achieving a $1.4 billion valuation. Earlier this week, Whatfix raised a $90 million Series D at $600 million, a threefold increase on what it was worth on closing the Series C last year. This follows vertiginous increases in valuation for the likes of Postman.

Zenoti provides customer relationship management (CRM) and enterprise resource planning (ERP) tools – covering bookings, self-check-ins, payments, marketing, employee management, and inventory management – for more than 12,000 spas and salons across 50 countries. It recently entered the fitness space. The company posted a 100% increase in annual recurring revenue (ARR) in 2020.

The new capital will support expansion through M&A and provide a liquidity event for longstanding employees who hold equity in the business.

“Zenoti has created the go-to cloud-based platform for leading beauty and wellness brands looking to grow their businesses and create better experiences for their customers,” said Arun Agarwal, a managing director at TPG, in a statement. “As consumers across the globe continue to prioritize self-care, we believe the company is well-positioned for strong growth.”

Norwest Venture Partners led a $15 million Series B round for the company in 2016. Zenoti had been operating for six years and derived most of its revenue from India. Now the US accounts for 60%.

“We talked to the founder about the size of the addressable market in Asia and it was double that of India alone. No one expects to get into China, at least not to begin with, but we figured that Asia and the Middle East would be 2-3x India. And then the US, Western Europe and Latin America is a huge market. After the fundraise, they moved aggressively in the US,” Mohan Kumar, who was involved in the deal, told AVCJ in February.

Zenoti was one of six positions Kumar took with him on spinning out from Norwest last year. He now runs Avataar Venture Partners, an India-focused mid to late-stage SaaS investor.

Bain & Company projects that India’s SaaS industry will generate $18-20 billion in ARR in 2022 for a global market share of 7-9%. This compares to $5-6 billion, or 3-4%, in 2019. Most of the revenue will be generated by start-ups that supply software to a global customer base, led by the US.

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• Topics
• South Asia
• North America
• Expansion
• Technology
• India
• USA
• enterprise software
• Avataar Venture Partners
• TPG Capital