Zenoti plans to announce Wednesday that it has raised $50 million in new Series C funding round led by Tiger Global Management, which should provide quite a boost for its mission to drag the beauty industry into the 21st century.
The Seattle startup has quietly grown into a 320-person operation with more than 5,000 salon and spa customers who use its mobile-focused business management software. The new round brings the total amount of money raised by Zenoti to $71 million, said co-founder and CEO Sudheer Koneru in an interview with GeekWire.
It’s the third-largest funding round for a Seattle startup this year, according to PitchBook data. And it’s another Seattle-area investment from Tiger Global Management, a New York-based firm known globally for making long-term investments in companies including Spotify, Facebook, LinkedIn, Flipkart, and other tech giants.
Tiger Global also led a $28 million round for Seattle marketing startup Amperity; a $50 million round in Seattle-based real estate company Redfin; and is an investor in Bellevue, Wash.-based OfferUp, a Craigslist competitor valued at more than $1 billion. The “prolific” firm raised a $3.8 billion fund this past October.
Zenoti launched in 2010 after Sudheer and his brother Dheeraj, owners of a chain of spas and former Microsoft employees, realized they could probably make better software for booking and scheduling spa clients than they could find on the market.
There are other companies making software for hair salons and nail spas, but that software tends to be designed for desktop computers, and that’s not what a generation raised with the smartphone wants to use on either side of the transaction, Koneru said. The company’s software aims to make booking a hair appointment, paying the salon, and leaving a tip the equivalent of ordering an Uber on your smartphone, he said.
“This whole industry is pretty underserved in terms of technology,” Koneru said. Companies around the world are realizing that they need to modernize the way they use technology to run and market their businesses (this is what the marketing people call “digital transformation”), or face challenges from newer, smaller competitors who understand how people want to interact with businesses.
Zenoti now has around 320 employees in Seattle and India, Koneru said. It plans to ramp up sales and marketing as it expands beyond well-known local clients such as Rudy’s Barbershop and national ones like MGM Resorts, and expects to hire at least 100 people by the end of 2019, he said. Zenoti previously raised a $15 million round in 2016 led by Norwest Venture Partners.
The company is now looking for ways to improve its software with predictive analytics, which could help salon owners better understand how to schedule their employees or market to their returning customers, Koneru said. It’s also thinking about ways to bring this technology to other markets, such as car care or pet care, but that’s a longer-term project, he said.