Zepto, a quick commerce startup created by two 19-year-old Stanford dropouts nine months ago, is now valued at $900M. The company revealed that it had raised $200M. The latest funding round comes as the firm looks to expand its 10-minute delivery service to more Indian cities and expand its dark store network.
Y Combinator Continuity Fund and Kaiser Permanente led the funding round. Nexus Venture Partners, Glade Brook Capital, and Lachy Groom were among the significant existing investors in Zepto’s newest Series D investment.
Till date, the company has raised approximately $350M and was valued at $560M in December 2021.
Zepto’s journey
Zepto, based in Mumbai, was started by Aadit Palicha and Kaivalya Vohra when they were both 19 years old. The duo, who had previously worked on a number of projects, including a ride-hailing commute app for school children, and had dropped out of Stanford two years ago, brought Zepto out of stealth mode in November of last year.
Its 10-minute delivery service is now available in 11 cities across India, and hundreds of thousands of orders are processed each day. According to Palicha, the startup’s current annualised revenue is between $200M and $400M, a figure he plans to increase to “at least $1B” by the end of the quarter in March next year.
“This incredible performance over the last few months has proven to investors that Zepto will be one of the winners in Indian Q-Commerce,” he stated emphatically.
Zepto 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.
Zepto competes with Swiggy, India’s most valuable food delivery startup, which has pledged to invest over $700 million in its Instamart rapid commerce business.
A number of other companies, like Blinkit, formerly known as Grofers, are also vying for a piece of the pie. The SoftBank-backed startup recently accepted an acquisition offer from Zomato, a larger meal delivery company that has shown interest in growing into the rapid commerce category, where it has previously struggled.
Future plans
In its home city of Gurugram, Zomato started a 10-minute food delivery test last month. Zepto is also testing a service in Mumbai that will deliver a variety of prepared foods, including hot beverages and snacks, within 10 minutes, according to the company.
According to Palicha, Zepto’s rapid grocery delivery is merely the beginning of a decade-long adventure. Though he wouldn’t reveal the startup’s bold future ambitions, he did say it’s reasonable to expect Zepto to expand into categories other than grocery in the long run, particularly those that are currently underrepresented by major e-commerce giants.
In the following 12 months, the startup aims to expand to another 12 to 20 locations and open a few hundred more dark stores to keep merchandise. According to Palicha, these dark stores are designed for quick delivery. There, the startup keeps track of the most frequently ordered commodities as well as a portfolio of SKUs in various pricing ranges. By the end of the year, the firm expects to have nearly doubled its personnel to 2,000.
