SaaS Platform Zenwork raises INR 1,200 crore led by Spectrum Equity

Zenwork, a Hyderabad-based software-as-a-service (SaaS) platform for businesses' digital tax compliance and regulatory reporting, has raised Rs 1,200 crore in funding from Spectrum Equity, a US-based growth equity firm, as it tries to expand its operations outside the US and into Europe and Asia.

Sanjeev and Rekha Singh formed the over 10-year-old company, which has been bootstrapped until recently, but said it needed money to take advantage of the significant rise in the automated tax compliance and regulatory reporting market as a result of the Covid-19 outbreak.

“Ten years ago we started in the US because the India market for SaaS wasn’t that mature and we were a bootstrapped company. With this funding we are aggressively going to expand into Europe, India and APAC,” said Sanjeev Singh, co-founder and CEO at Zenwork. “We wanted not just the money but a good growth partner, where Spectrum Equity has come in.”

Zenwork claims to support over 100,000 small businesses, including 30,000 firms of Certified Public Accountants (CPAs). It claims to have added over 40,000 new customers in each of the last two years, with over ten unicorns among its current customers.

To help with this, the business said it will invest extensively in expanding the capabilities of its Tax1099 and Compliance platforms, recruiting between 100 and 150 individuals in engineering, sales, and product management jobs. Zenwork had only 18 employees up until now.

"Zenwork has achieved remarkable success to date by focusing relentlessly on the digital tax reporting and onboarding requirements of its diverse customer base," said Adam Margolin, Managing Director at Spectrum Equity. "With millions of businesses subject to tax informational reporting and likely to adopt e-filing over the coming years, we see a massive opportunity for Zenwork.”

According to Singh, Zenwork expects to acquire up to 50,000 new customers by 2022, as more businesses turn to gig workers to expand, increasing their need for regulatory and tax compliance services. Zenwork's API-driven architecture, as well as its focus on acquiring high-quality data from federal and other sources, he added, are attracting customers.