The round would value the company at close to $2.5 billion pre-money, almost double of what it commanded in August this year
when it had raised $150 million from investors led by D1 Capital at a $1.33 billion valuation and joined the growing list of unicorns this year, they said.
“The new funding round is a mix of primary as well as secondary capital where some of its existing investors and early backers will completely exit, thereby realigning the capitalisation table,” said a person with knowledge of the company’s plans.
According to him, the funds are currently carrying out due diligence and binding term sheets are expected within a fortnight. Zetwerk is likely to close the round by end of this month, he said.
A company spokesperson declined comment while emailed queries to spokespersons of Iconiq Capital and Greenoaks Capital remained unanswered as of press time Wednesday.
The company, which is likely to attain profitability soon, will use the funds for its global expansion plans, including inorganic growth opportunities, said the sources cited above.
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Founded in 2018 by Amrit Acharya, Srinath Ramakkrushnan, Rahul Sharma and Vishal Chaudhary, Zetwerk helps small and medium enterprises translate their digital designs into physical products.
It operates in more than 25 industry segments, having entered new manufacturing categories such as consumer goods, apparel, defence, space, and aerospace.
Currently, around 85% of its business is concentrated around the Indian market and the international business contributes around 10% to its order book.
“The plan is to use the new funds to expand aggressively in overseas markets,” said one of the sources with direct knowledge of the development.
In August, Zetwerk had
raised $150 million in its Series E round led by D1 Capital Partners and with participation from new investors Avenir and IIFL along with existing ones Greenoaks Capital, Lightspeed Venture Partners, Sequoia Capital and Accel.
While announcing the funding round, its CEO Amrit Acharya had told ET that the company had turned Ebitda positive and was likely to grow 4x in the current financial year to clock a revenue of around Rs 3,500 crore. Ebitda is earnings before interest, tax, depreciation and amortisation.
In February, Zetwerk had
raised $120 million in Series D round from investors led by US-based Greenoaks Capital and Lightspeed Venture Partners. The round had valued the company at around $600 million.
Zetwerk saw its revenues grow three times to Rs 949 crore for the year ended March 2021. The company also saw its losses narrow to 2% of its revenues from 8% of revenues in FY20, as ET had reported in July this year.
Net cash used from operations came down to Rs 80 crore last fiscal from Rs 115 crore in FY20, while the working capital intensity of the business has significantly reduced to 10% of the total turnover from 35% of turnover. “We have shrunk our burn and are on track to become profitable in another 12-15 months,” Acharya had told ET then.
The liquidity rush in the Indian and overseas markets has helped many companies raise larger pools of capital at bigger valuations.
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