Indian grocery startup Zepto has achieved a significant milestone. The company announced on Friday that it has secured $200 million in its latest funding round. With this injection of capital, the company’s valuation soared to $1.4 billion. What makes this achievement even more noteworthy is that it comes during a period described as “the deepest downturn in capital markets in over a decade”. This success makes Zepto the first Indian startup to hit the unicorn status this year, and the only one to achieve such a valuation in almost a year.
Key takeaways from the announcement:
- Funding came from US-based investment firms StepStone Group and Goodwater Capital.
- Nexus Venture Partners, Glade Brook Capital, and Lachy Groom, existing investors, also participated.
- Zepto’s valuation jumped from $900 million in May 2022 to $1.4 billion now.
What Sets Zepto Apart
In a challenging startup landscape, where many instant delivery ventures are scaling down or shutting shop, Zepto has managed to thrive. Notable examples of startups facing difficulties include BlinkIt, which sold for less than its initial funding, and Reliance Retail-backed Dunzo, which after spending over $150 million, made severe operational cuts. But Zepto stands out. Its secret? “Execution and discipline with which you are governing every inch of your supply chain,” states Aadit Palicha, Zepto’s CEO.
Zepto’s rapid success can be attributed to a few factors:
- A commitment to quick deliveries, boasting an average delivery time of 13 minutes, the fastest in its sector.
- Strong operational control with the majority of its dark stores, or densely located warehouses, being cash flow positive.
- The company’s dedication to both growth and profitability.
Roots and Vision
Founded in 2021 by 19-year-old Stanford dropouts, Aadit Palicha and Kaivalya Vohra, Zepto has showcased a meteoric rise. They launched Zepto, which not only deals with groceries but also electronics, in late November 2021. Currently, the company processes over 300,000 orders daily across seven major Indian cities. Their success isn’t just financial. The co-founders emphasize their tech-driven vision, with Vohra highlighting their focus on “building one of the best supply chain product stacks in the country.”
Future Aims and Economic Landscape
Following their recent cash injection, Zepto aims to really plant its flag in big Indian cities like Delhi, Mumbai, and Bengaluru. These urban centers are where they pull in a hefty monthly cash flow of between $50 million and $60 million. Looking ahead, there’s the potential for an Initial Public Offering (IPO) come 2025 – y’know, aligning with that goal they’ve set to rake in the profits within just about a year or so.
Zepto’s success comes during challenging economic times for Indian startups. In H1 2023, startups in the country raised only $5.46 billion, marking a steep decline from previous years. Despite this downturn, Zepto remains an inspiration for many. As Will Robbins, GP at Contrary and an early supporter of Zepto mentioned, the company sets a high bar for investments.
Notable insights:
- Zepto has grown sales by 300% year-on-year and aims for $1 billion in annualized sales soon.
- The company will ponder expansion into new cities in about a year.
Conclusion
Zepto’s journey from being a bold idea of two young entrepreneurs to becoming a billion-dollar startup is nothing short of inspiring. Their success story, set against a backdrop of an economic downturn, serves as a beacon for startups worldwide. For more insights on the rapid rise of startups in India, visit Tracxn, a leading market intelligence firm.