Quick commerce: Zepto, India’s 1st unicorn in 2023, raises $200 mn in Series E
Virendra Pandit
New Delhi: During the COVID-19 pandemic, the two Mumbaikars, both just 19, dropped out of Stanford University and launched their startup, and now each of them has a net worth of over Rs. 1,000 crore.
No wonder, their startup Zepto on Friday raised USD 200 million at an evaluation of USD 1.4 billion, becoming India’s first unicorn (valued at over USD 1 billion) in 2023.
Zepto, a quick-commerce player for hyper-local deliveries, raised USD 200 million in a Series E round at a valuation of USD 1.4 billion, led by US asset management firm StepStone Group, along with Goodwater Capital and some existing investors, the media reported.
The startup’s existing investors, including Nexus Venture Partners, Glade Brook Capital, and Lachy Groom, have doubled down in Zepto with significant follow-on investments.
In Series D funding, Zepto raised USD 200 million from Y Combinator Continuity Fund in May 2022 at a valuation of USD 900 million, which is still sitting in its bank accounts.
Zepto Cofounder and Chief Executive Officer (CEO) Aadit Palicha said the company will primarily use the fresh infusion of funds to invest in growth. The company is eyeing to be EBITDA-positive in the next 12-15 months.
The firm is planning to expand its presence in existing markets and also aims to invest more in its add-on offerings such as Zepto Cafe, a cloud kitchen setup in its current dark stores, which delivers beverages and snacks in 10 to 20 minutes.
Zepto may consider going public in early 2025, after remaining EBITDA profitable for about three quarters.
“In 12 months, when we go EBITDA-positive, we will not need to spend much of this money. Then, we’ll do a pre-IPO round. This was our last growth equity round and was done just to build our balance sheet,” Palicha said.
The firm, which is currently operational in seven cities, runs about 200 dark stores. It plans to increase its store count by about 40 percent by March 2024.
It has grown its sales by 300 percent year-on-year and might achieve USD 1 billion in annualized sales in the next few quarters. Its average order value is in the range of Rs. 400 to Rs. 470.
Zepto is looking to expand into categories such as medicines and electronics and strengthen Zepto Cafe. But the core focus will remain on groceries, “the mother of all categories.”
It all started in 2020 when Aadit Palicha and Kaivalya Vohra, from Mumbai, dropped out of the prestigious Stanford University, USA, and launched Zepto. They had no idea that they’d become successful so soon. However, they quickly understood the market and realized there was a high demand for groceries and other everyday utility products because of lockdowns during the pandemic.
During the second wave of COVID-19, they launched an online grocery delivery app, KiranaKart, and tied up with grocery stores to deliver products to customers. In November 2021, they raised USD 60 million under the new name, Zepto, promising to deliver groceries in 10 minutes.
Aadit Palicha joined Stanford University to pursue a degree in computer engineering. Before Zepto, when he was just 17, he launched GoPool and then an AI project, PryvaSee.
His partner, Kaivalya Vohra, Zepto’s Chief Technology Officer, also went to Stanford University to become a computer engineer, but just like Aadit Palich, he also realized his potential and decided to start Zepto.
The two made it to the Hurun India’s Future Unicorn Index 2022 list which says Aadit has a net worth of about Rs 1,200 crore, while Kaivalya has a net worth of Rs 1,000 crore.
