Introduction:
On Friday, a rapid food delivery company called Zepto revealed that it has raised $200 million in a fresh round of funding, valued at $1.4 billion. In contrast, most other businesses in the same sector have collapsed or are experiencing problems. Thanks to the financing, Zepto became this year’s first unicorn company in India.
StepStone Group, a sizable LP in numerous venture funds, including Nexus Venture Partners, led Zepto’s Series E fundraising. The American business has just made its first direct investment in India. Goodwater Capital and prior backers Nexus, Glade Brook Capital, and Lachy Groom also participated in the round.
The company was valued at $900 million in an investment round that Zepto revealed in May last year. Aadit Palicha, co-founder and CEO of Zepto, claims that the company, which has raised over $560 million to date, has yet to receive any secondary transactions in the new round.
The money comes at a time when the bulk of instant delivery firms around the world—including Gopuff, Jokr, Getir, Gorillas, Instacart, and others—have drastically reduced their operations, witnessed a sharp decline in their private valuations, or have shut down totally. More than $10 billion was raised by these startups as a whole.
Locally, Zepto’s competitor Blinkit was sold after running for more than ten years at a loss. After aggressively investing over $150 million to expand its dark storefronts, Done, which Reliance Retail sponsors, has delayed employee paychecks and curtailed employment. Nothing positive has come of this risk.
Palicha and Kaivalya Vohra formed Zepto at the age of 19. In the latter part of November 2021, the crew forced Zepto out of stealth mode. The team had left Stanford two years earlier after working on several initiatives, including a ride-hailing software for school children.
Zepto Becomes India’s First 2023 Unicorn:
Zepto Becomes India’s First 2023 Unicorn [Source of Image : Techcrunch.com]
The company, which buys and distributes anything from groceries to technical items, operates in seven Indian cities and processes more than 300,000 daily orders. Like many other companies in the category, Zepto depends on hundreds of so-called “dark stores” dispersed throughout well-known city neighbourhoods. The majority of these stores, according to Palicha, are completely EBIDTA-positive.
He asserted that Zepto has significantly reduced its “burn” and plans to be IPO-ready in 12 to 15 months with an EBIDTA-positive measure implemented across the board. Sales at the company are up 300% from last year. According to Palicha, whose annualized revenue sales currently exceed $700 million, it intends to reach $1 billion in sales annually over the next several months.
Even with this funding, Zepto co-founder and CTO Kaivalya Vohra remarked, “We want to maintain our discipline, avoid complacency, and push hard to hit EBITDA positivity.” “In that journey, our main P&L improvement drivers are technology and product.
We are now creating one of the best product stacks for supply chains in the country and investing heavily in goods that directly benefit customers. I’m excited about the upcoming construction phase because we were created to be technologically perfect.
With the funding, Zepto became the first unicorn from India this year amid a protracted economic downturn that has significantly lowered investor interest. Indian startups raised just $5.46 billion in the first half of 2023, according to market intelligence firm Tracxn, a steep decline of 68% from the $17.1 billion raised in the same time of 2022 and a decrease from $13.4 billion in H1 2021.
65 Indian companies reached or surpassed a $1 billion valuation in 2021 and 2022, becoming unicorns. Will Robbins, GP at Contrary and an early supporter of Zepto claimed that he has been investing less this year since Zepto sets the bar for comparisons so high.
