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Monday, December 04 2023

Zepto raises $200M in Series-E funding, achieves Unicorn status

Zepto founder 1
Photo Credit : Google

New Delhi: Zepto, an online grocery delivery startup, has successfully secured $200 million in a Series-E funding round, elevating its valuation to $1.4 billion. This achievement also marks the first unicorn of 2023. Leading the fundraise was StepStone Group, a US-based private markets investment firm. Zepto, established in the aftermath of the pandemic, made this announcement on Friday.

The funding event also holds significance as it signifies StepStone Group’s inaugural direct investment in an Indian enterprise. Furthermore, California-based consumer-focused venture capital firm Goodwater Capital participated as a new investor in the round. Notably, existing backers, including Nexus Venture Partners, Glade Brook Capital, Lachy Groom, and others, exhibited further confidence in Zepto by increasing their investments in the company.

In 2022, Zepto had previously secured $200 million in a Series D funding round led by the Continuity Fund of Y Combinator’s technology startup accelerator. This valuation at that time stood at $900 million. Founded in 2021 by Aadit Palicha and Kaivalya Vohra, who are Stanford University dropouts, Zepto is also gearing up for a potential listing on the public market within the next two to three years. Earlier this year in May, Zepto had appointed key executives in preparation for its listing plans.

The core essence of Zepto’s service lies in delivering over 6,000 grocery products within a 10-minute window through a network of delivery hubs across the nation. This concept, commonly referred to as quick commerce, has faced scrutiny due to its high expenditure and lack of a sustainable business model.

“Despite the challenging capital market conditions, this successful fundraise validates Zepto’s exceptional operational discipline. Zepto has demonstrated the viability of the quick commerce model by achieving EBITDA positivity for the majority of its dark stores. The company’s burn rate has significantly reduced, and with this trajectory, Zepto aims to achieve full EBITDA positivity within the next 12 to 15 months. Importantly, Zepto has achieved these profitability metrics while maintaining rapid growth,” expressed Zepto in a statement.

With an impressive sales growth of 300% year-on-year, the company anticipates reaching $1 billion in annualized sales in the coming quarters.

Aadit Palicha, co-founder and CEO of Zepto, emphasized, “Our success is rooted in effective execution. Our culture of financial prudence and customer-centricity has brought us to this point, yet there is so much more we aspire to achieve. Our vision is to create a lasting company, and it truly feels like this is only the beginning.”

This funding news arrives in a landscape where other rapid delivery platforms like Dunzo are facing financial constraints.

“Even with this infusion of capital, we remain committed to maintaining our financial discipline, avoiding complacency, and vigorously pursuing EBITDA positivity. In this journey, technology and product development are pivotal drivers for enhancing our profit and loss dynamics,” added Kaivalya Vohra, co-founder and CTO of Zepto.

Avendus Capital served as the exclusive advisor to Zepto for this funding deal.

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