The round was led by US investor StepStone Group, which made its first direct investment in an Indian firm.
New Delhi: Zepto on Friday said it has raised $200 million in a Series E round of funding at a valuation of $1.4 billion, making the online grocery company India’s first unicorn of 2023, and lifting hopes in the startup ecosystem facing a prolonged funding winter.
The fundraise was led by US private market investor StepStone Group, which also made its first direct investment in an Indian company. The Group led the round with an investment of $75 million, persons aware of the matter said. Goodwater Capital, a California-based consumer-focused venture capital firm, joined as a new investor. Existing investors such as Nexus Venture Partners, Glade Brook Capital, and Lachy Groom also took part in the round.
Founded in 2021 by Stanford University dropouts Aadit Palicha and Kaivalya Vohra, Zepto is also considering a public listing in the next two to three years. It currently runs more than 200 dark stores which ship everything from chips to diapers, notebooks, cooking oil and cigarettes in seven cities. In 2022, Zepto had raised $200 million in a Series D funding round led by US technology startup accelerator Y Combinator’s Continuity Fund, which then valued the startup at $900 million.
Quick commerce firms proliferated following the pandemic outbreak, with platforms such as Zomato’s Blinkit and Swiggy’s Instamart offering home delivery of products such as shampoos, soaps, vegetables, and tea, which customers typically buy from local stores. However, the model has been questioned for its high cash burn and for delivering goods otherwise available easily in local markets.
“We’re going to push even harder towards profitability. The idea is to get to Ebitda positive in the next 12 to 15 months and do it at a scale of well over a billion dollars in sales annually,” Palicha, who is also CEO of Zepto, said in a virtual press meet.
Palicha said Zepto plans to add 40% more dark stores over the next 12 months while also reducing the time taken for each of these stores to turn profitable. “The majority of our dark stores are fully Ebitda-positive… The trajectory that we were on with 150 dark stores or so that are already profitable, with most of our dark stores already generating cash, the entire company is likely to be Ebitda-positive in the next 12 to 15 months. We have been actually able to grow our sales 300% year-on-year, reduced burn at the same time and turn most of our stores profitable,” he said.