Instant grocery delivery startup Zepto has raised $200 million in a new funding round at a valuation of $1.4 billion. The funding makes Zepto the first Indian startup to attain the unicorn status this year. While most other firms in the category have struggled in recent times, Zepto has given a new lease of life to the industry.
Zepto was last valued at $900 million in a funding round it unveiled in May last year. The total funding raised by the company to date accounts for nearly $560 million.
The round was led by US-based investment firms StepStone Group and Goodwater Capital (known for investing in Alfie Health and Pocket FM) , along with continuing supporters such as Nexus Venture Partners, Glade Brook Capital, and Lachy Groom.
Zepto is committed to delivering groceries within 10 minutes, was established in 2021 by two 19-year-old individuals who left Stanford University. It competes in the rapid commerce field alongside SoftBank-supported Swiggy and Blinkit, all vying to excel in swift deliveries. Notably, Zepto’s CEO Aadit Palicha highlighted that the company boasts the shortest average delivery time of 13 minutes among these competitors.
The newly acquired funds are intended by Zepto to deepen its presence across the seven major Indian metropolises it currently serves, including Delhi, Mumbai, and Bengaluru. In these locations, the company garners a monthly revenue ranging between $50 million and $60 million, as shared with Reuters by Palicha. He further added that Zepto will consider expanding to new cities in a year.
The company is also planning an initial public offering in 2025, he said, but did not divulge further details. A majority of its dark stores (densely located warehouses) generate cash and the company aims to be profitable in 12 to 15 months.
How Zepto plays the quick commerce game well?
Zepto entered the market by capitalising on the rising demand for quick-commerce delivery following the outbreak of the Covid-19 pandemic. Zepto competes against the likes of Swiggy’s Instamart, Zomato-acquired Blinkit, and Reliance-backed Dunzo.
It is one of the first firms in India to try to validate the quick commerce concept, which has taken off in a number of markets, including North America and Europe. However, as many venture capitalists lose interest in speedy delivery, a number of firms in the field have either pulled back or shut down completely.
Further, the Indian company operates in seven Indian cities, offering a wide range of products, from groceries to electronic gadgets, and manages an impressive daily order volume exceeding 300,000.
The funding arrives during a period when most instant delivery startups around the world – such as Gopuff, Jokr, Getir, Gorillas, Instacart, and others – which together amassed over $10 billion in funding, have notably scaled back their activities, witnessed substantial drops in their private valuations, or ceased operations altogether.
According to reports, Zepto intends to become a publicly traded entity by 2025, embodying “a thriving technology firm that garners customer affection,” as stated by the company.
