In 2010, Sudheer Koneru and his brother Dheeraj Koneru launched software-as-a-service (SaaS) firm Zenoti – an all-in-one cloud-based software solution for the beauty and wellness industry. The startup currently serves 1,000 brands and powers more than 12,000 businesses in more than 50 countries. Over 76 million bookings are made through Zenoti platform annually.
The startup, which was formerly known as ManageMySpa, allows users to manage every aspect of the business in a comprehensive mobile solution: online appointment bookings, POS, CRM, employee management, inventory management, built-in marketing programmes, and more. It claims to help clients streamline their systems and reduce costs, while simultaneously improving customer retention and spending.
“Zenoti remains committed to helping businesses find their greatness and achieve better business performance, including higher revenues and increased operating margins, while enabling our industry to set new standards for the consumer experience,” Sudheer Koneru, CEO of Zenoti, tells YourStory, adding, “Our industry, one traditionally slow to progress technologically, is passionately embracing it in the wake of COVID-19 to seamlessly and safely connect with customers.”
On Monday, December 14, 2020, the Hyderabad and Bellevue-based enterprise cloud platform, announced the closing of a $160 million Series D funding round led by private equity firm Advent International, through Advent Tech and affiliate Sunley House Capital, at a valuation of more than $1 billion.
With this, Zenoti joined the growing list of Indian SaaS unicorns such as Zoho, Freshworks, Druva, and Icertis.
Tiger Global and Steadview Partners also participated in the latest round. To date, Zenoti has raised a total of approximately $250 million.
The company said it will use the capital to continue scaling operations, support research and development, and fuel AI innovations, including advanced algorithms leveraging Zenoti's rich enterprise system data to optimise customer employee scheduling, inventory management, marketing, and dynamic pricing to enhance profitability and efficiency. The firm added that it would also pursue inorganic growth opportunities.
With 100 percent year-on-year growth in 2020, the company’s touchless and mobile solutions serve all aspects of consumer engagement, allowing for easy appointment scheduling, self-check-ins, automatic payments, and more. The startup supports a portfolio of global brands, including European Wax Center, Hand & Stone, Massage Heights, Rush Hair & Beauty, Sono Bello, Hair Cuttery, Profile by Sanford and, most recently, Toni&Guy.
Like other businesses hit by the COVID-19 outbreak, Zenoti too faced the wrath of the pandemic with all its customers shut for weeks. However, Sudheer believes that the global crisis has further increased the need for tech integration in spas and salons in order to reopen safely.
“It is not just better hygiene but IT infrastructure which is touchless and meets the heightened consumer expectations for health and safety in the stores during the global pandemic,” he adds.
Sudheer says that Zenoti is looking to double its employee base by 50 percent – from 550 to 900 by 2022 – by hiring across the board, and with a deeper emphasis on core engineering or product roles. This plan is in line with the company’s efforts to double its revenue in 2021. Besides this, it will also expand its latest offerings in physical therapy, fitness, and pet grooming or spas.
Zenoti’s India office counts for almost 70 percent of its workforce, with close to 400 employees working for the company.
“The technology platform is like an ERP and CRM integrated specifically for the industry. Our ability to help transform this industry and enable Uber-like experiences, empowering businesses to focus only on their craft, is helping us accelerate our growth,” Sudheer says.
Over the next fiscal, Zenoti has further plans to acquire two or three similar smaller SaaS players with revenues of $5 million, as it looks to take an inorganic route for new customer acquisition.
The company also plans to go public in a few years.
“As per our estimates, providing software solutions and services to the beauty and wellness segment is a $14 billion market opportunity globally. SaaS continues to be a highly profitable business and we continue to grow at 100 percent year-on-year," Sudheer says.
The US market makes up for 60 percent of Zenoti’s revenue, followed by the UK with 20 percent contribution. India and West Asia make up almost 5 percent of the total revenue.
"We are seeing businesses embrace Zenoti’s technology to help pivot and strengthen their offering and we are impressed by the company’s growth over the last year, particularly among some of the most well-established brands in the industry,” adds Eric Wei, Managing Director on Advent’s technology team in Palo Alto.
Zenoti, which competes with the likes of Mindbody, Booker, Phorest Salon Software etc globally, claims that its touchless technology is repositioning the beauty and wellness industry to address heightened consumer expectations for health and safety during the global pandemic. According to the firm, it is seeing up to 6.5X increase in customer appointment bookings using Zenoti.
With a burn rate of $1 million monthly, the 10-year-old startup aims to be profitable by the second quarter of FY2022.
Edited by Kanishk Singh