Zepto, the online grocery delivery startup, has raised $200 million in its Series-E funding round. This funding has led to a company valuation of $1.4 billion, establishing it as the first unicorn of 2023.
The fundraise was led by StepStone Group, a US-based private markets investment firm, as indicated by Zepto, the startup established in the aftermath of the pandemic.
This investment also signifies StepStone Group’s initial direct involvement with an Indian company.
Furthermore, California-based consumer-focused venture capital firm Goodwater Capital entered the fray as a fresh contributor to the funding round. Worth mentioning is the fact that Zepto’s existing investors, including Nexus Venture Partners, Glade Brook Capital, Lachy Groom, and others, showcased their continued confidence in the company by significantly increasing their investments.
During 2022, Zepto secured $200 million in a Series D funding phase, spearheaded by Y Combinator’s Continuity Fund, a technology startup accelerator based in the United States. This infusion of funds valued the rapid commerce enterprise at $900 million at that time. Established in 2021 by Aadit Palicha and Kaivalya Vohra, dropouts from Stanford University, Zepto is additionally contemplating a debut on the public market within the upcoming two to three years. As of May this year, Zepto made strategic promotions among several crucial executives, aligning with its preparations for the impending listing.
Operating through a network of delivery hubs spread across the nation, Zepto efficiently brings forth a selection of over 6,000 grocery items within a mere 10-minute timeframe. This innovative approach is commonly referred to as “quick commerce.” Nevertheless, this model has faced scrutiny due to its substantial cash consumption and the absence of a viable long-term business strategy.
“This fundraise, in the midst of the deepest downturn in capital markets in over a decade, validates Zepto’s bestin-class operating discipline. Zepto has proven the quick commerce business model by turning the majority of its dark stores fully EBITDA positive. Zepto’s burn has reduced significantly, and with this trajectory, the company will be fully EBITDA positive in 12 to 15 months. More importantly, Zepto has delivered these profitability numbers while continuing to grow rapidly,” Zepto said in a statement.
The company has grown its sales by 300% year-on-year and will likely achieve $1 billion in annualized sales within the next few quarters, it said.
Aadit Palicha, Co-Founder and CEO, Zepto, said, “This business is about execution and we are succeeding because our execution is strong. Our culture of deep frugality and worshipping customers has gotten us here, but there is still so much for us to achieve. We are in this to build a generational company and it truly feels like this is just the beginning.”
The funding announcement arrives at a time when other rapid delivery platforms like Dunzo are grappling with significant financial challenges.
Kaivalya Vohra, Co-Founder and CTO, Zepto, said, “Even with this capital, we want to maintain our discipline, avoid complacency, and push hard to hit EBITDA positivity. In that journey, the biggest drivers of P&L improvement for us are based on technology and product.”
Zepto enlisted Avendus Capital as its sole advisor for the transaction.
