Indian grocery startup Zepto announced on Friday that it has raised $200 million in fresh funding at a valuation of $1.4 billion, making it India’s first startup to cross the billion-dollar mark in just over a year of its inception.
Zepto stated that “it raised funds in the middle of deepest-ever downturn in the venture capital market” from US investment firms Goodwater Capital and StepStone Group.
Journey to a Unicorn
Launched by two 19-year-old Stanford dropouts last year, Zepto competes with Softbank-backed Swiggy and Blinkit in the rapidly growing hyperlocal delivery space, which promises delivery of groceries in as little as 10 minutes. Among those, Zepto CEO Adit Palicha said the company’s average delivery time was 13 minutes, according to Reuters.
Zepto’s rival Swiggy is planning to go public in India next year, as per Reuters.
Zepto plans to use the funds to deepen its presence in the seven Indian cities it currently operates in, including Delhi, Mumbai, and Bangalore, where it generates monthly revenue of $50 million to $60 million, Palicha told Reuters.
“The market’s operation through a downturn has forced us to be more disciplined. There’s no (question of) growth or profitability, both should be there,” said the company, which is also planning an initial public offering in 2025, Palicha said, without providing more details.
While Zepto is still incurring losses, most of its so-called dark stores – densely located warehouses – generate cash and the company aims to be profitable in 12 to 15 months, it said.
Palicha said the company will consider expansion to new cities a year from now.
In May 2022, when it last raised funds, Zepto was valued at $900 million. The company said in a statement that it has tripled its sales year-on-year and is on track to achieve $1 billion in annual sales in the next few months.
Investment bank Avendus advised Zepto on its current fundraise.