In a groundbreaking move, online grocery delivery startup Zepto has successfully raised $200 million in its Series-E funding round, propelling its valuation to an impressive $1.4 billion. This achievement marks Zepto’s ascent as the first unicorn of 2023, solidifying its position in the market. Spearheaded by US-based private markets investment firm StepStone Group, the funding underscores Zepto’s rapid rise since its inception in response to the pandemic.
A notable highlight is that this investment signifies StepStone Group’s inaugural direct investment in an Indian company. The backing of Zepto by such a prominent player is indicative of the startup’s potential and the promise it holds.
Joining the funding round as a new investor is Goodwater Capital, a California-based venture capital firm with a consumer-focused approach. Furthermore, existing investors, including Nexus Venture Partners, Glade Brook Capital, Lachy Groom, and others, have reaffirmed their confidence in Zepto by substantially increasing their investments.
First Unicorn of 2023
Noteworthy is Zepto’s prior success in a Series D funding round in 2022, where it secured $200 million with the leadership of Y Combinator’s Continuity Fund. At that time, the valuation reached $900 million. Founded in 2021 by Aadit Palicha and Kaivalya Vohra, both Stanford University dropouts, Zepto has steadily forged its path and is now contemplating a public listing in the coming two-to-three years. This year, the company strategically elevated key executives, setting the stage for its listing plans.
Zepto’s distinctive offering centers around the delivery of over 6,000 grocery items within a remarkable 10-minute window, facilitated through an expansive network of delivery hubs across the nation. While this innovative quick commerce model has gained traction, questions have arisen regarding its significant cash burn and the sustainability of its business framework.
In light of the present economic challenges, Zepto’s successful fundraise stands as a testament to its operational excellence. The company has demonstrated remarkable efficiency in its quick commerce model, achieving EBITDA positivity for a majority of its dark stores. Zepto’s financial discipline has significantly reduced its burn rate, setting the trajectory for complete EBITDA positivity within 12 to 15 months. Notably, this impressive financial performance has occurred alongside sustained rapid growth.
Zepto’s sales have soared by an impressive 300% year-on-year, projecting its potential to attain $1 billion in annualized sales within the forthcoming quarters.
Aadit Palicha, Zepto’s co-founder and CEO, emphasizes the company’s commitment to execution and its dedication to customers. He envisions Zepto as a generational entity and views its current achievements as merely the beginning of an exciting journey.
Amidst a challenging landscape, this funding news arrives, highlighting Zepto’s strength and stability compared to other quick delivery platforms. Zepto remains unwavering in its pursuit of EBITDA positivity, with technology and product innovations playing pivotal roles in its growth journey, as stated by Kaivalya Vohra, co-founder and CTO of Zepto.
