The Atoms Spotlight - What Zetwerk did in its first 100 days after funding

Zetwerk, the B2B marketplace for manufacturing materials, is one of the latest entrants to the unicorn club. The company was launched in May 2018 and has witnessed exponential growth in the past 3 years. Though initially envisaged as a SaaS platform, they pivoted to a B2B marketplace soon after. Since then there’s been no looking back.

But what prompted those decisions, what strategies paid off? And how did they raise funding with just an idea?

These are important questions, especially in the context of the Atoms program. And I try to answer them here, drawing from a conversation with Amrit Acharya, co-founder of Zetwerk.

Idea to inception

Founded by IIT alumni Amrit Acharya, Rahul Sharma, Srinath Ramakkrushnan and Vishal Chaudhary, Zetwerk today is not as was first conceptualized. The founders set out to build a SaaS platform that would serve large enterprises in the manufacturing space. However, three months into the journey they realised this would take too long a sales cycle to get results. The founders were also not sure of how much capital they would need to sustain that strategy, and how much patience they would need to build that out.

So they made a decision.

Within three months, they pivoted to becoming a marketplace for manufacturing items in the same sector. Amrit recalls that they were getting insights from the people they were talking to, and the indication was that there was a gap in that segment they could fill and start quickly.

They acted on that insight. This market feedback was really important for Zetwerk’s quick and effective pivot.

The founders by then had a clear vision of which segment they wanted to target and how the business would shape up. They were also clear from the beginning that they needed private capital to build that. Funding would help them accelerate their journey, and personally, a little comfort with capital helped.

With this clarity they set off to raise their seed round armed with an idea and a bunch of slides.

Amrit says that they did consider building without external capital, but they concluded that the velocity of company building would be a trade-off, which they could not compromise on. Srinath saw that too and had an underlying appreciation of how capital could help. 

In their seed round, Zetwerk raised $1 million.

The journey to market

When they started the company they wanted to build software for large manufacturing companies to manage custom manufacturing better. That was the problem they understood at Amrit’s first job at ITC. Srinath understood the sector even better due to his family business, which was into custom manufacturing. 

There were good examples of companies across the board which had done pretty well in this sector, first building a core software offering and then building a marketplace on top

However, within three months when they looked at pivoting and launching a marketplace, they spoke to the investors with some nervousness. But all of them backed the Zetwerk team. Amrit says they were glad that the investors had conviction in them and their journey.

Zetwerk started hiring after the seed round and also started building the first set of product features. They were operating from a sense of urgency, a lot of work was done even before they signed the term sheet. 

Timeline

They signed the term sheet in May 2018, the pivot happened between July and December.

They hit product-market fit around the same time. 

“Data played an important role. Even in the initial days, the business generates a lot of data even though it is not very structured. There are a lot of insights that you can pick up if you listen well”, recalls Amrit. The founders balanced it out with a point of view and a hypothesis. This is what helped them build their go-to-market strategy. 

Some critical decisions post funding

First, Amrit and the team wanted to find a good office space. They knew this is where they as a team would spend the maximum amount of time. Amrit recalls the office space actually worked as a good optimization outcome.

Second was to hire the right talent and build a great team. They looked at hiring two types of talent, one group which would continue to work on R&D, and build something today that they could sell tomorrow.

Third, hiring leaders for the long haul. They started reaching out to those people who the founders thought could be a great fit even before closing the seed round, and managed to convince 5 or 6 of them to join. These hires today serve as important leaders in the organization, Amrit said. They were all mission aligned individuals and were clear on the goal to build something really big or die trying.

Fourth, Amrit recalls that having institutional investors on their captable at a very early age was also very helpful in setting some standards and culture. The reporting, just having regular board meetings, having timed feedback, the rigour and discipline early on was very helpful as they grew.

And fifth, Amrit proudly talks about a decision they took for their employees on day zero. It was a decision to get the best health insurance policy in the country. Today they cover not just the employees, but their parents and family. These are some of the philosophies the founders wanted to infuse into the culture of the organization and have managed to do that without any regrets.

Amrit believes that they were extremely lucky to have raised money with just their credentials and an idea. Atoms would have been perfect for them too, he says, adding that it’s like getting paid to find product market fit.

Well, that’s what we’ve been telling everyone too, haven’t we?

A reminder that applications for Atoms are always open. Applications from now onwards will be considered for the Holi cohort around March 2022.