Grocery startup Zepto becomes India's first unicorn in new funding round

INDIAN grocery startup Zepto said on Friday (Aug 25) it has raised US$200 million in fresh funding at a valuation of US$1.4 billion, making it the first startup in the country to cross the billion-dollar valuation mark in nearly a year.

Zepto said it raised the funds “in the midst of the deepest downturn in capital markets in over a decade” from US-based investment firms StepStone Group and Goodwater Capital. Existing backers including Nexus Venture Partners, Glade Brook Capital and Lachy Groom also participated in the deal.

Zepto, which promises delivery of groceries in 10 minutes, was started in 2021 by two 19-year-old Stanford dropouts, and competes with SoftBank-funded Swiggy and Blinkit, which are all betting on fast deliveries in the so-called quick commerce sector. Even among them, Zepto’s chief executive officer Aadit Palicha said the company has the quickest average delivery time of 13 minutes.

Zepto plans to use the funds to go deeper into the seven Indian metros it is currently present in, including Delhi, Mumbai and Bengaluru, where it makes a monthly revenue of US$50 million to US$60 million, Palicha told Reuters.

“Operating in a bear market has forced us to be more disciplined. There is no (question of) growth or profit, it has to be both.” The company is also planning an initial public offering in 2025, he said, without giving further details.

While Zepto is still loss-making, a majority of its so-called dark stores – densely located warehouses – generate cash and the company aims to be profitable in 12 to 15 months, it said.

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The company will consider expanding to new cities after a year, Palicha said.

Zepto was valued at US$900 million when it last raised funds in May 2022. A company statement said it had tripled sales year on year and will achieve US$1 billion in annualised sales in the next few quarters.

Investment bank Avendus advised Zepto on its current fundraising round. REUTERS