Zetwerk, which helps businesses convert designs for manufacturing tools into physical products, on August 23 said it has raised $150 million led by D1 Capital Partners, valuing it at $1.33 billion, continuing the dealmaking frenzy for startups in general and B2B marketplaces in particular.
The Series E round makes Zetwerk India’s 25th unicorn of 2021- private firms valued at over a billion dollars- in a record-breaking year. Along with new investors Avenir and IIFL, existing backers Greenoaks Capital, Lightspeed Venture Partners, Sequoia Capital and Accel also invested. Oyo’s Ritesh Agarwal and Cred’s Kunal Shah invested as well.
Founded in 2018 by Amrit Acharya, Srinath Ramakkrushnan, Rahul Sharma and Vishal Chaudhary, Zetwerk- which means ‘strong foundation’ in Dutch, provides manufacturing services such as fabrication, machining, casting and forging from small and medium companies and connects them to mid-to-large OEMs (original equipment manufacturers) and engineering, procurement and construction firms- earlier in India and South-East Asia and now in North America as well.
For customers, Zetwerk says its products are manufactured faster, at competitive prices and with quality, while for manufacturing partners, it drives higher capacity utilization of manufacturing capacities and offers services including logistics, raw material procurement and working capital access.
Zetwerk said its revenue nearly tripled from Rs 360 to Rs 949 crore for FY21. With a strong order book at Rs 5,000 crore currently, the company aims to quadruple revenue by FY22. About 70-80% of these orders will fructify into revenue in the short term. Zetwerk is also profitable on an EBITDA basis (Earnings Before Interest Taxes Depreciation Amortisation), a metric for operating profits.
“Supply chains are getting reconstructed and the desire to explore Indian markets has never been higher. The cost of manufacturing is reaching parity with other countries,” CEO Acharya told Moneycontrol.
It has over 100 clients in North America, ranging from small enterprises to large conglomerates. It makes nail clippers for one company for instance- seen as a niche market but used widely at the same time.
Zetwerk has benefitted from global supply chains moving to emerging markets like India, tariff wars between the US and China and a broader anti-China stance. A change in political winds could pose a risk to Zetwerk, but it has 5-10 manufacturing partners so that it can combat this possible risk.
Zetwerk is often clubbed by investors along with other B2B marketplaces such as Infra.Market, OfBusiness and Moglix. But Acharya said that Zetwerk is different. Unlike the others, it makes niche parts and also works for broader industries like aerospace and defence, compared to infrastructure and construction materials, which the other companies focus on.
500-employee-strong Zetwerk also opened a US office a few months back, although it has been able to sell remotely to overseas clients for the most part.
“There is a lot of depth in Indian manufacturing, and a lot of outlets only utilise 40-50% of capacity. We enable additional utilisation,” Acharya said.
The three-year-old startup’s clients include conglomerates such as Tata Power, JSW and L&T. “It was initially difficult to convince big companies, but today they know us. Our sales cycle has come down from six months to one month,” he added.