Executive Summary:
Zilingo is a technology platform that offers software for apparel manufacturers while allowing them to directly sell on its platform.
Zilingo makes money by charging a commission for each successful sale, collecting interest from loans, and by offering various software products.
Founded in 2015, Zilingo has become one of the biggest startup success stories in Southeast Asia. It has raised close to US$350 million in funding thus far.
What Is Zilingo?
Zilingo is a technology platform that offers software for apparel manufacturers while allowing them to directly sell on its platform.
Brands can access 900+ verified manufacturers and suppliers to source customized garments, fabric, and yarn from countries such as Bangladesh, India, Sri Lanka, Indonesia, Vietnam, and more.
The offering, dubbed Zilingo Trade, enables brands to produce as low as 100 units per color within 4 to 6 weeks. Zilingo claims that its customers, which include world-renowned brands such as Forever 21 or Lacoste, can save up to 15 percent compared to traditional manufacturers.
Separately, the firm offers a software product called Zilingo Trade that enables apparel manufacturers to track production outputs, real-time work-in-progress (WIP), quality of goods produced, and each individual shift.
Another software that Zilingo offers is Connect, which enables brands to set up their own website, take advantage of various marketing services (e.g., graphic design or video production), and track inventories, all while marketing their products on all kinds of offline and online stores.
Zilingo, furthermore, offers Spotlight, which is a more tailored marketing service for already established businesses. The service entails social media marketing campaigns, model and product shoots, graphic design, and a few more activities.
Lastly, the brands that Zilingo works together with can also sell directly on its platform (via Zilingo Trade).
B2B buyers can either transact on Zilingo’s website or tap into the 6,000+ active sellers by downloading the firm’s mobile app, which is available on Android and iOS devices.
Detailing Zilingo’s (Troubled) History
Zilingo, which is headquartered in Singapore and is a play on the world ‘Zillions’, was founded in 2015 by Ankiti Bose and Dhruv Kapoor.
At first, it seemed that both were destined for illustrious corporate careers. After graduating with a degree in Electrical Engineering from the Indian Institute of Technology (IIT), Kapoor went on to work as a software engineer for Yahoo and Kiwi.
Bose, on the other hand, began her career at McKinsey. After a year in consulting, she pivoted to the world of startups by joining Sequoia Capital’s Indian office as an analyst.
Not only did she get to be around dozens of different founders but also became acquainted with Shailendra Singh, Sequoia’s long-time partner, who would go on to be one of her biggest mentors.
One day, while shopping on her vacation in Bangkok, Bose became fascinated with the richness of products merchants in the city’s markets various were offering. Many of those were selling during weekend markets such as Chatuchak.
However, their business was still conducted completely offline. Neither did they utilize any form of communication (such as Facebook) nor did they possess any online presence to market their products.
Bose, having first-hand experience with how startups can transform analog industries, was immediately intrigued.
Furthermore, the startup scene in Southeast Asia was just getting started. Rocket Internet-funded Lazada had recently been founded while now-market leader Shopee was yet to be launched.
She held those first conversations with Kapoor about what would eventually turn into Zilingo at a party in Bangalore.
At first, the two founders were working on Zilingo next to their day jobs. Luckily, Bose’s mentor Singh thought the world of her and was more than willing to write Zilingo’s first check.
And that he did. In November 2015, Sequoia Capital alongside various angels invested US$1.9 million into Zilingo’s seed round. That same month, they officially unveiled the product.
The founders launched Zilingo as a B2C marketplace that connects merchants selling clothes with customers in the region. Zilingo’s services would entail shipping, packaging, payment options, an analytics dashboard for mobile, order tracking, refund and cancellation options, and more.
Zilingo itself would be headquartered in Bangkok, Thailand where it launched with 300 onboarded sellers.
During the first year, Zilingo expanded into Singapore while expanding its merchant base in its home country of Thailand.
In September 2016, Bose and Kapoor managed to raise a second round of funding (Series A) that netted Zilingo another US$8 million in capital.
The funding enabled Zilingo to vastly expand its footprint. The marketplace launched in Indonesia, Hong Kong, Korea, Vietnam, and Cambodia while adding another 5,000 sellers to its platform.
Bose and Kapoor would soon realize that serving customers across Southeast Asia is a particularly costly undergoing. The various countries go by different languages, are often separated by sea (such as Indonesia or the Philippines), and have consumers whose spending power is comparatively lower.
As a result, the founders decided to pivot Zilingo’s business model away from serving customers toward (fashion) merchants and manufacturers. However, Zilingo, at least for the time being, continued to operate a consumer-facing app through which merchants could sell their goods.
In September 2017, exactly a year after the previous fundraise, Zilingo managed to attract US$18 million in Series B funding.
And a mere six months later, in April 2018, it netted another US$54 million (Series C) from its existing backers. Over 10,000 independent sellers and 2 million products were live on the platform at the time of the funding.
Throughout 2018, Zilingo managed to grow income fourfold – with the B2B segment making up 75 percent of the firm’s revenue. By the beginning of 2019, Zilingo was ready to expand its B2B offering across the globe.
Bose and Kapoor, in order to fund the expansion, raised a whopping US$226 million in Series D funding in February 2019. Investors valued Zilingo at US$970 million during the round, making it one of Southeast Asia’s most treasured startups.
There was certainly no shortage of ideas. For example, Zilingo spent around $1 million to fly a bunch of influencers to Morocco in order to film content for the platform. Unfortunately, the initiatives, which the execs hoped would add another one million users, only netted them around 10,000 new members.
In the meantime, Bose’s stock began to rise alongside that of her firm. Forbes added her to their 30 under 30 list in 2018. She would be repeatedly invited to speak at events and on TV where she positioned herself as a champion of women and female leadership. started
After all, Bose had managed to build a quasi-unicorn by the time she turned 27 (she launched Zilingo at the age of 23).
To fulfill those ambitions, Bose and the rest of the executive team decided to expand into both Australia as well as the United States. In 2019, Zilingo opened offices and hired dozens of salespeople to get the firm established.
Its goal was to work together with celebrities and world-renowned brands to design and produce clothing on their behalf. The firm aimed to spend close to $100 million to get its U.S. business off the ground.
Zilingo itself was able to hire rockstars as well. In July 2019, the firm announced the hiring of James Perry, who had spent close to two decades at banking giant Citi, as its first Chief Financial Officer (CFO).
By the end of 2019, Zilingo had grown to over 800 employees as well as 75,000 retailers and 6,000 factories on the platform. It also made its first-ever acquisition in December, buying Sri Lanka-based software company nCinga Innovations in a US$15.5 million cash-and-stock deal.
Unfortunately, the Covid-19 pandemic had some different plans for Zilingo. In April 2020, Zilingo laid off around 100 of its employees as factories around the world were (temporarily) shut down.
Key employees, such as Sid Narayanan, Zilingo’s head of SaaS products and the executive who led the nCinga deal, departed from the business as well. By July, over 12 percent of Zilingo’s staff were relieved of their duties.
Other, more opportunistic deals added further headaches. Early into the pandemic, Zilingo signed a deal with the Indian government to supply 10 million KN-95 masks valued at US$22.5 million. Zilingo ultimately failed to deliver 3.2 million of those masks, which led the Indian government to file a lawsuit against the company.
Although Zilingo, driven by exponential increases in demand for online commerce, managed to substantially increase revenue in 2020, its losses began to spiral out of control as well.
As a result, the founders decided to raise US$40 million in debt funding from Värde Partners and Indies Capital Partners in July 2021. By the end of 2021, Bose was frequenting TV networks, stating that revenues had not only recovered but surpassed to pre-Covid levels. And even though CFO Perry departed from the firm in September, no one seemed to be too concerned.
By early 2022, reports began emerging that Zilingo had hired Goldman Sachs to raise another US$200 million in funding. However, the firm’s fortunes suddenly shifted almost overnight.
On April 12th, 2022, Zilingo announced that it had suspended CEO and founder Ankiti Bose after her fundraising plans drew questions into the firm’s accounting practices. The probe was centered around how Zilingo would record revenues.
In its fundraising documents, Zilingo’s representatives stated that the firm generated US$140 million in revenue during the fiscal year 2021. However, a whistleblower with knowledge of Zilingo’s finances contacted the board, stating that the firm had only really recorded US$40 million in revenue over that time span.
Meanwhile, Shailendra Singh, Bose’s mentor, also resigned from his board position. Bose herself denounced any of the allegations, stating that they were part of a witch “hunt against” that ensued after she filed a harassment complaint at the end of March.
Subsequent reporting painted an even grimmer picture. Tensions between Bose and Kapoor grew larger due to different views about Zilingo’s strategic direction. Even the signing of funding contracts wouldn’t happen on time because the founders stopped talking to each other.
“One of the individuals on the nCinga team had started taking a deeper interest in Ankiti and was keen on working with her. However, the volley of messages she received from the individual had made her significantly uncomfortable,” revealed a source during a YourStory investigative piece. “At one point, it seemed like he was stalking her. So she refused to engage. However, the Co-founder (Dhruv) and senior management would keep arguing there was nothing wrong with him. The push and pull lasted for some bit before the individual was asked to leave.”
On May 3rd, long-time communications exec Naushaba Salahuddin was side-lined as well. A day later, the firm’s board hired Deloitte to conduct an investigation into Bose’s harassment charges.
In the meantime, the firm was defaulting on its US$40 million debt it raised back in July 2021. Bose even publicly announced that she had secured funding to pay off Zilingo’s debt. Unfortunately, that option became improbable just days later.
Zilingo’s board officially fired Bose on May 20th following the investigation by Deloitte. Those investigations, for instance, revealed that Bose was drawing a monthly salary of S$50,000 although her employment contract stated it as S$8,500.
Over the span of two months, as Zilingo was beginning to miss salary payments, over 100 employees resigned from the company. CFO Ramesh Bafna, who had joined the firm back in March 2022, as well as long-time COO Aadi Vaidya, were among those employees who departed Zilingo.
Ankiti Bose consequently announced her resignation from Zilingo’s board on June 30th, 2022. She, together with co-founder Kapoor, allegedly tried to take back control of her company one last time until she decided to ultimately leave it altogether.
It remains to be seen where Zilingo is headed next as the firm’s future and that of its employees remain in limbo.
The Business Model of Zilingo
Zilingo makes money by charging a commission for each successful sale, collecting interest from loans, and by offering various software products.
The business model of Zilingo can probably be best described as a full-stack B2B commerce platform that combines a four-sided marketplace with various software tools.
Participants in Zilingo’s marketplace include the following stakeholders:
- factories who use its software to optimize their production
- brands that want to source various products for manufacturing
- retailers purchasing goods at wholesale prices as well as the firms selling those
- clients that want to tap into the firm’s marketing solutions
In a traditional fashion supply chain, even to this day, all of these customers and processes are disintermediated from each other, meaning they all function in separate silos without much communication.
This can cause a variety of inefficiencies and headaches. For instance, brands wanting to produce clothes have to rely on the factory to ensure that working conditions, as well as materials, are both in accordance with international legislation.
Furthermore, they often lack proper visibility into the performance of their supply chains as the factories utilize outdated software (or sometimes even none at all).
What Zilingo tries to do is to combine all of these related sub-processes and parties into one integrated platform.
For instance, by working together with factories to set up Manufacturing Execution Systems (MES), it can monitor production, quality, and worker input in real-time. Consequently, it charges a subscription fee that allows those factories to use the software.
This data can then be accessed by the brands that have their clothes manufactured in those very same factories. The factories themselves also profit because Zilingo sends them additional business while the brands benefit from added efficiency and transparency.
Brands, factories, and other types of merchants can, in turn, sell their products either online (through their own website or a Zilingo-powered one) as well as by offering them on Zilingo’s B2B app.
Zilingo, in turn, charges a commission for each successful sale it facilitates through that B2B platform.
Those very same customers can, furthermore, tap into a loan that Zilingo offers in conjunction with a variety of banks. Zilingo itself will take a chunk from the interest that’s being paid to the bank.
And due to Zilingo’s data advantage (the firm has data on all kinds of transactions), it can more reliably assess how likely a borrower is to default on their loan.
Zilingo Funding, Revenue & Valuation
Zilingo, according to Crunchbase, has raised a total of US$347.9 million across 7 rounds of debt and equity financing.
Notable investors include the Indian division of Sequoia Capital, Burda Principal Investments, Temasek, and many others.
Zilingo is currently valued at US$970 million after having raised US$226 million in Series D funding back in February 2019. However, due to the previously detailed financial inaccuracies, it can be assumed that the firm’s investors have written down the firm’s valuation ever since.
Similarly, Zilingo’s revenue figures are unclear as well. Reporting by Bloomberg detailed three different revenue figures for the fiscal year 2021:
- US$190 million before the closure of the year and thus outdated
- US$164 million, which entails uninvoiced revenue
- US$140 million was used in due diligence reports for fundraising purposes
Interestingly, the firm shared a separate document with investors that showed annual earnings of only US$40 million for the fiscal year 2021.
