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ZENOTI RAISES $160 MILLION SURPASSING $1 BILLION UNICORN VALUATION

December 24, 2020
December 24, 2020
Blake Wisz via Unsplash

Zenoti, the cloud platform for the beauty and wellness industry, closed a $160 million round of Series D funding at an over $1 billion valuation.

WHO: Zenoti was founded in 2010 by Sudheer Koneru, Anand Arvind, Dheeraj Koneru (Sudheer’s brother), and Saritha Katikaneni with the vision of building a holistic management solution tailored to the needs of companies in health and wellness verticals. Today it powers more than 12,000 businesses in over 50 countries. Zenoti’s touchless and mobile solutions serve all aspects of consumer engagement. The all-in-one, cloud-based software solution is engineered for reliability and scale, harnessing the power of enterprise-level technology for businesses of all sizes. Zenoti helps clients streamline their systems and reduce costs, while simultaneously improving customer retention and spending.

Advent International is one of the largest global private equity investors with 15 offices in 12 countries and over 360 private equity transactions completed. As of June 30, 2020, the firm had $58bn in assets under management, excluding the $2 billion raised for LAPEF VII. Advent has a long history of growth investments dating back to its founding in 1984 and recently launched Advent Tech, a dedicated global fund focused on growth investments and buyouts of leading technology companies.

WHY: This round of funding will enable the scaling of operations, research, and development as well as accelerating innovation including AI, as the current crisis has been a catalyst for accelerating adoption.

IN THEIR OWN WORDS: “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, a managing director on Advent’s technology team in Palo Alto. “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 established brands in the industry. We are incredibly excited about Zenoti and believe the company has a significant runway for growth.”

“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,” said Sudheer Koneru, CEO at Zenoti. “Our industry, one traditionally slow to progress technologically, is passionately embracing it in the wake of COVID-19 in order to seamlessly and safely connect with customers.”

DETAILS:

  • Zenoti closed a $160 million round of Series D funding at an over $1 billion valuation. The round was led by Advent International with participation by Tiger Global and Steadview Partners.
  • To date, Zenoti has raised a total of approximately $250 million.
  • In August 2019 the business raised $20 million from Steadview Capital following a $50 million Series C in May 2019.
  • The company claims to have grown by over 100% in 2020 and expects 120% in growth next year. According to Koneru, Zenoti may cross $100 million in annual recurring revenues in the next 18 months.
  • About 60% of business comes from the US market, followed by the UK which accounts for almost 20% of the company’s new bookings. Other top markets include Australia and New Zealand, while India and West Asia are still emerging markets for the company.
  • Zenoti charges customers a monthly subscription of $400 to $1,000 per store fee, depending on the modules used, along with a payment processing fee and a 10% fee on revenue derived from its marketing tool.
  • Koneru said as SaaS remains a highly profitable business model, the company expects to maintain its growth trajectory, and will look at an IPO after crossing $200 million in annual recurring revenues.
  • Zenoti’s portfolio of global brands using the platform include European Wax Center, Hand & Stone, Massage Heights, Rush Hair & Beauty, Sono Bello, Hair Cuttery, Profile by Sanford, and, most recently, Toni&Guy.
  • The company has 70% of its workforce consisting of close to 400 employees in India, with aims to double its employee count to 900 by 2022.
  • This investment marks Advent’s seventh growth equity investment in 2020. In addition to Advent’s long history of technology investing, the firm also has significant investment experience in the beauty and personal care industry, most recently with its acquisition of Olaplex in 2019.
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