After a prolonged dry spell, the Indian startup ecosystem is on the cusp of witnessing a momentous event as it prepares to welcome its first unicorn of 2023. Zepto, a quick-commerce delivery startup, is currently engaged in advanced discussions aimed at securing a staggering $150 million in its upcoming Series E funding round. If successful, this funding round would propel Zepto’s valuation to an impressive $1.3 billion.
According to sources, the anticipated funding round, led by StepStone Group, is expected to reach its conclusion within the next month.
It is worth mentioning that StepStone Group serves as a limited partner (LP) for Nexus Venture Partners, the current backer of Zepto.
“While StepStone is infusing around $60 Mn, Nexus Venture Partners will be pumping in around $40 Mn. The remaining amount will come from other existing investors,” the sources said.
In addition to Nexus Venture Partners, Glade Brook Capital and Lachy Groom, existing investors, are set to participate in the funding round. According to sources, the funding round will exclusively involve equity investment and will not include any debt component.
Zepto declined to provide any comments or respond to inquiries regarding the matter.
After experiencing a significant increase in the number of unicorns with 44 in 2021, India saw a sharp decline to 21 unicorns in 2022. However, with the imminent completion of the latest funding round, Zepto is poised to become the first Indian unicorn of 2023, breaking a seven-month drought since the beginning of the year.
Established in 2021 by Aadit Palicha and Kaivalya Vohra, Zepto made its entry into the market by seizing the growing demand for rapid commerce delivery that emerged in the wake of the Covid-19 pandemic. With its enticing proposition of delivering groceries within a mere 10 minutes, the startup swiftly garnered attention and generated interest from numerous investors.
In a remarkable feat, the startup garnered significant attention after successfully securing $60 million in funding from prominent investors such as Glade Brook Capital, Nexus, and Y Combinator, among others, during a funding round in 2021. Building on this momentum, Zepto went on to raise an impressive $100 million in its Series C funding round. Notably, in its Series D round last year, the startup managed to secure a substantial $200 million in funding, led by Y Combinator’s Continuity Fund, valuing the company at approximately $900 million.
In its inaugural year of operations, Zepto recorded a standalone net loss of INR 390.3 crore in FY22. The company reported operating revenue of INR 142.3 crore during the same period. Since commencing operations in April 2021, Zepto incurred total expenses amounting to INR 532.7 crore in FY22.
Zepto finds itself in direct competition with well-funded competitors such as Swiggy’s Instamart, Blinkit (acquired by Zomato), and Reliance-backed Dunzo. Swiggy recently injected a substantial $700 million into Instamart in December 2021, while Zomato acquired Blinkit for $568 million the previous year. However, Dunzo, which received a significant investment of $240 million from Reliance Retail in early 2022, is currently grappling with severe cash flow challenges, leading to employee layoffs and delayed salaries for many of its staff members.
