Online grocery delivery startup Zepto has raised $200 million in Series-E fundraise, valuing the company at $1.4 billion, ending India’s 11-month unicorn drought.
The fundraise was led by US-based private markets investment firm StepStone Group, Zepto, set up in the aftermath of the pandemic, on Friday said.
New investors StepStone Group and Goodwater Capital, existing backers Nexus Venture Partners (where StepStone is a limited partner) and GladeBrook Capital, and individual investor Lachy Groom participated in this round.
The funding is of particular importance because Zepto is the first unicorn, or startup valued at over $1 billion, to be minted in India this year. Molbio Diagnostics was the last to achieve unicorn status in September 2022.
The latest fundraise gives Zepto firepower in a highly competitive segment, where the company is jostling for position with the likes of Zomato-owned Blinkit, Swiggy Instamart and Tata-owned BigBasket. The other key player in the segment, Reliance Retail-backed Dunzo, has seen a sharp downturn in its consumer business and is struggling to close new financing to clear pending dues.
At the height of the funding boom in 2021, the country added a unicorn almost every week. As many as 44 startups entered the unicorn club in 2021 and 23 were added last year. Since then, investors tightened their purse strings and have been cherry-picking the startups they’re backing, reflecting their prudent stance.
Zepto essentially delivers over 6,000 grocery products in 10 minutes through a network of delivery hubs across the country. The model has come to be known as quick commerce but has been questioned for its high cash burn and the lack of a sustainable business model.
“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.
“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,” said Aadit Palicha, co-founder and CEO, Zepto.
News of funding comes amid a stiff cash crunch faced by other quick delivery platforms such as Dunzo.
“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,” said Kaivalya Vohra, co-founder and CTO, Zepto.
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