Zoho buys minority stake in Bengaluru-based startup Zentron Labs

Set up by former classmate of Zoho CEO, Zentron's clients include ITC Foods

Zoho Corp, a home-bred cloud-based business operating systems company, has picked up a minority stake in Bengaluru-based Zentron Labs for an undisclosed amount, sources close to the development said.

Set up in 2012 by Krishnan Ramabadran and Ramgopal Vallath, Zentron provides automation systems for processes that require visual checking. For example, AppleTron, a post-harvest solution developed by the company, assists in visual checking of apples ready to be packaged and sold, using high-speed Infrared technology and machine-learning algorithms. The start-up, which has 21 employees on its rolls, now counts clients such as ITC Foods and several others across pharmaceuticals, fast moving consumer goods, electronics, horticulture and automotive sectors.

“We spoke to several venture capital funds when we were in our early days. But somehow we were not convinced that taking money from them was the right thing,” said Ramabadran, confirming the investment. “So, we met Sridhar Vembu (founder and chief executive officer of Zoho). The investment from Zoho is not just about money; it is also about the expertise and mentoring we get.”

Interestingly, Ramabadran was Vembu’s neighbour at the hostel of Indian Institute of Technology-Madras several years ago. Vallath is an alumnus of the same college.

Zentron is now exploring developing several products relating to its focus area of automating visual checking and quality checking. With revenues starting to trickle in and products seeing higher traction, Ramabadran said Zentron had no plans to raise any further institutional funding rounds in the near future. Zentron is targeting a revenue of Rs 1 crore in FY15.

Before founding Zentron, Ramabadran had set up Cosmic Circuits, a semiconductor intellectual property firm, which was acquired by US-based Cadence Designs Systems in 2012. Prior to that, Ramabadran had worked for Texas Instruments as a chip-designer in India for about 15 years.

The other co-founder of Zentron, Vallath, had earlier held senior positions at Airtel, Dell, HP and Azim Premji Foundation.

Zentron is now exploring developing several products relating to its focus area of automating visual checking and quality checking.

With revenues starting to trickle in and products seeing higher traction, Ramabadran said Zentron had not plans to raise any further institutional funding rounds in the near future. Zentron is targeting a revenue of Rs 1 crore in FY15.

Zoho, on the other hand, is open to investing in more start-ups, and has already closed a few more fundings that the company wants to keep under wraps until the start-ups are ready to announce their products.

“We have done investments in our own way. Some of these companies have not yet announced their products so far; so I won't talk about them,” Vembu told Business Standard. “There is one medical equipment company, and one semiconductor firm, and some others. We will announce the products and let the products do the talking. These are mostly companies of our friends or peers who are doing interesting things.”

Founded in 1996 by Vembu and five others, Zoho offers around 30 software products under three broad segments - collaboration, business and productivity tools. The company competes with the likes of Microsoft, Google and Salesforce.com