Koneru's Seattle startup Zenoti raises $15M

Zenoti, which helps spa and salon chains manage their businesses, has raised $15 million in a round led by Norwest Venture Partners, which co-founder and former spa-chain owner Dheeraj Koneru said will help the six-year-old Seattle company expand geographically and enter the fitness and yoga arena.

“Software is not looked at as an asset yet in the spa arena, and that’s one of the things we want to change,” said Dheeraj Koneru, who founded Zenoti with his brother, CEO Sudheer Koneru. “Wouldn’t it be great if customers could check in electronically, enjoy their spa experience, walk out without having to stop because their credit card will be debited, provide feedback and get a response? You’ll see that happening.”

Some time back, the Koneru brothers took six years out of their software-development careers to build and run a 10-outlet spa chain in Hyderabad. They learned first-hand that spas had no single piece of software to help them manage and expand their business, and that using software packages to meet various needs meant the pieces couldn’t interoperate. “We talked to other chains, and they said ‘We use this and that; we just accept what’s there and live with the pain.'”

Thinking there had to be a better way, the brothers sold their spas and re-entered the software arena, starting Zenoti in 2010.

Though usable by companies of all sizes, Zenoti is especially aimed at mid-size to large chains that are growing rapidly, Koneru said.

It provides a view of a company’s operations in its locations and coordinates the scheduling of customer appointments, marketing efforts and inventory tracking. It sends service reminders, product-refill reminders and special offers automatically via social media; juggles employee schedules; computes payrolls; and collects and collates customer feedback.

Gift cards issued at one location can be redeemed at another, and analytics assess the entire chain’s performance, including marketing, finances and inventory.

Zenoti-Logo-WhiteAbout half the company’s revenue now comes from the U.S., and a significant proportion of the rest is from Australia, India and Southeast Asia.

The company plans to use the new funding to expand into Europe, Dheeraj Koneru said. Now at 140 employees, it has 90 open positions and will use part of the money to fund those salaries, he said. Zenoti claims more than 5,000 spas in more than 30 countries are using its software, including Lakme Salons, Sothys Malaysia, Massage Heights, Massage Green,and Kaya Skin Clinics. The company also caters to the luxury market, including brands such as Elemis, and has expanded into the resort space, adding Taj Hotels, Melcro Crown, Crown Hotels, and Alaya hotels to its customer mix.

Zenoti’s offering uses Amazon Web Services exclusively. It costs an average of $400-$500 per month.

This round brings the company’s total funding to $21 million. It received $6 million Series A round from Accel Partners at its founding.

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