Zepto becomes unicorn, raises $200 mn at $ 1.4 bn valuation

Q-commerce startup Zepto has raised USD 200 million in a Series E round, said the company’s co-founders Aadit Palicha and Kaivalya Vohra in a press meet on Friday.

The 2-year-old company has raised funds at a valuation of USD 1.4 billion making it the first unicorn of 2023 in India.

The fundraise was led by StepStone Group followed by California-based VC firm Goodwater Capital. Further, existing investors, including Nexus Venture Partners, Glade Brook Capital, Lachy Groom, and others, doubled down with their investments in the company, Zepto founders said.

The fundraise comes amid Zepto’s focus on profitability. Palicha, who is the CEO of the company said that the q-commerce startup aims to turn profitable in the next 12-15 months.

The grocery delivery company plans to use the money to expand and go deeper in its existing markets with a focus on EBITDA positivity.

“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. We are building one of the best supply chain product stacks in the country today and we are investing heavily in customer-facing products as well,” said Kaivalya Vohra, co-founder and CTO of Zepto in a prepared statement.

Palicha during the press meet shared that the company plans to add about 40 per cent more dark stores with the fundraise. Currently, Zepto runs 200 plus stores across 14-15 cities.

In a chat with ETRetail earlier this year, Palicha shared that of Zepto’s 200-plus stores, about 150 stores are already EBITDA-positive.

As per industry estimates, Zepto’s stores reach profitability 15-18 months post-launch, while it takes about 24 months on average for a grocery and supermarket chain.

The company’s monthly sales currently stand at around Rs 400 crore plus.

Palicha refrained from sharing the current burn rate of the startup, however, highlighted that Zepto’s customer acquisition costs and delivery costs are down by about 70 and 35 per cent, respectively YoY.

Sharing IPO plans, he confirmed that the q-commerce startup plans to go public by early 2025. Recently, the company announced top-level changes appointed a new COO and CFO, and expanded the role of senior leadership.

Zepto competes with the likes of Swiggy Instamart, Blinkit, Tata’s BB Now, and Reliance-backed Dunzo. As per industry reports, Zepto currently has a market share of around 24-25 per cent.

Zepto, which was launched in 2021 raised USD 60 million from investors including Glade Brook Capital, Nexus, and Y Combinator, and individual backers Lachy Groom, Neeraj Arora, and Manik Gupta, among others. Later that year, the company raised a Series C round of USD 100 million.

In May 2022, the quick commerce startup raised USD 200 million led by Y Combinator at a valuation of around USD 900 million. The round included new investor Kaiser Permanente, along with existing ones.