Germ of an idea: How Zetwerk pivoted to write its Make in India story

Zetwerk co-founder and CEO Amrit Acharya.

Note to Readers: Germ of an Idea is a series about the entrepreneurial idea — how it was conceived, shaped and launched, detailing the early days filled with uncertainty and apprehension, the bold steps taken and the eventual success. The series hopes to inspire thousands of potential Indian entrepreneurs who are on the cusp of starting up or have ventured recently or are in schools and colleges dreaming of turning founders

There is something about pivoting and Acharyas. In his early 40s, Arabinda Acharya left his insurance job in Bhubaneswar to chase his dream to get a doctorate. The mid-career shift to academics proved to be hugely beneficial. At 58, Dharitri Dwivedy started her non-profit which is thriving.

Years later, when their son, Amrit Acharya, had to design a business pivot, it was a case of history repeating itself, and also the beginning of a billion-dollar journey.

Zetwerk, originally thought of as a software as a service (SaaS) business, needed a pivot to succeed. Amrit and his co-founders decided to turn into a B2B manufacturing marketplace. Today, the company is at $2.7 billion.

Like his father, Acharya, too, was confident of seeing the change through, though he was in the middle of raising a seed fund based on the earlier business model. The risk paid off.

“I may have acquired my risk-taking abilities from my father, but I owe much of my entrepreneurial spirit to my mother,” says Acharya. “She had started her non-profit venture at 58 and encouraged me to take as much time as I needed with my new company.”

The Germ

After graduating from IIT-Madras, where he met his future co-founder Srinath Ramakkrushnan, Acharya had his first professional stint at ITC before heading to Haas School of Business, Berkeley.

Up until that point, entrepreneurship was not part of the plan. It was all about excelling at a job and building a steady career but the Bay Area fired up his entrepreneurial spirit.

“Wherever I went, be it a café, restaurant or the college campus, all you heard was the talk around setting up a business. Hardly anyone was talking of taking up a job,” says Acharya, who started working with McKinsey after leaving Berkeley. “The bug bit me and I quit McKinsey. I called up Srinath and started discussing the possibility of building a startup.”

Ramakkrushnan’s father used to run a fabrication shop in Coimbatore and often face problems with sourcing materials, supply chain and logistics. Identifying the right supplier, managing spending and tracking the progress was a perpetual problem that Ramakkrushnan’s father grappled with.

That’s when the two friends decided to find a fix for problems faced by manufacturing that needed immediate solutions.

“We decided to jump into it in early 2018,” says Acharya. Along with Ramakkrushnan, Rahul Sharma, Vishal Chaudhary and Ankit Fatehpuria also joined them as co-founders.

Zetwerk looks to ensure on-time delivery of products within the customer’s budget with the help of its in-house manufacturing operating system software.

The software solution enables the digital selection of supplies, pricing recommendations, engineering designs and real-time tracking for quality and cost.

Within three years of starting up, Zetwerk became a unicorn, a business valued at a billion dollars or more, when it raised $150 million in a Series E round led by D1 Capital Partners. The company is EBITDA positive even as unicorns are resorting to layoffs as funding dries up.

The company recorded revenue of Rs 4,961 crore in FY22, with an EBITDA of Rs 57 crore (excluding non-cash ESOP expenses).

“To me, being profitable is a bigger achievement than being a unicorn,” says Acharya.

The early days

Acharya and Ramakkrushnan rented out a one-bedroom apartment in HSR Layout in Bengaluru to kick-start their journey. The plan was to develop a solution that would help large multinational firms and conglomerates manage their supplier database.

Most original equipment makers (OEMs) were looking for reliable and trusted suppliers for smooth operations. They often faced operational issues that would delay projects.

There was a trust deficit between manufacturers and suppliers, which convinced Zetwerk to pivot from the original plan of being a SaaS company to a manufacturing marketplace.

Their investors, Shailesh Lakhani of Sequoia Capital and Sasha Mirchandani of Kae Capital, had committed the first cheque based on the SaaS model but now the business was in transition.

“I was genuinely worried,” says Acharya. The founders weren’t sure how the investors would react. The money wasn’t wired in yet but to their surprise, the investors understood the need for change.

They raised around $1 million in seed funding in August 2018. A few months later in December, they raised another $9 million in a Series A round led by Accel and Sequoia. In November 2019, Lightspeed Venture Partners and Greenoaks Capital led a $32 million Series B round.

Backstory

Growing up in Bhubaneswar, Odisha, Acharya excelled in academics. Chasing the IIT dream came with the territory. When he got through to IIT-Madras, he was exposed to a new culture.

He loved the change and that is also where met Ramakkrushnan. In the final year, Acharya got placed at ITC as an assistant manager, and so did Ramakkrushnan.

“This was further indication that we were destined to do something together,” says Acharya. His first task at ITC was to help build a new factory. Suddenly, he found himself handling a huge budget and interacting with almost 300 suppliers and more than 1,000 workers.

That perhaps was the first lesson of his soon-to-come entrepreneurial shift.

Road Ahead

The pivot has rather worked out well for Zetwerk, which is now part of some of the country’s biggest projects. It has won a $16.6-million contract from Larsen & Toubro to supply fabricated girders for the Mumbai-Ahmedabad bullet train project. It also has projects related to India’s space research programme and as well part of some renewable energy works.

In 2022 alone, Zetwerk acquired four firms. It has also set up a state-of-the-art facility for manufacturing hearables (audio devices) and wearables (smartwatches, neck bands, etc.) in Noida to help Indian brands procure from within the country, playing a part in the government’s Make in India initiative.

That is an impressive journey but if his teammates are to be believed, Acharya doesn’t celebrate enough. “This has been a long-standing complaint against me,” says Acharya. After a milestone is crossed, he talks about the next. He doesn’t pause for celebrations. “I’m trying to change that though.”