‘Zepto Will Always Be Grocery-first’

Amidst the deepest downturn, the company secured $200 million at a $1.4 billion valuation whereas the pre-IPO round is yet to take place as the startup plans to go public in the first half of 2025

Zepto which promises 10-minute delivery of groceries was founded in 2021 by two Standford dropouts. Aadit Palicha, Co-founder and CEO, Zepto believes, “Quick commerce is going to be the fastest growing consumer internet category in the country”.

Funding Logbook

Within three years of outlier performance, Zepto has attained the status of Unicorn after raising $200 million at a $1.4 billion valuation. The latest development was even remarkable as Zepto became the first to join the billion-dollar club in India this year.

The latest Series E round brought in new investors, the round was led by the StepStone Group, a US asset management firm. Additionally, California-based VC firm Goodwater Capital joined the group as a new investor.

Notably, existing investors such as Nexus Venture Partners, Glade Brook Capital, Lachy Groom and more doubled down in Zepto with meaningful follow-on investments.

Amongst all stakeholders, the founder duo, Palicha and Vohra disclosed that they hold a 25-30 per cent stake in the company, as of now.

Before this round, the quick commerce startup secured $200 million at a $900 million valuation in May 2022.

Next Milestones: Profitability & IPO

Aadit Palicha, Co-founder and CEO, Zepto highlighted that most of the capital raised in earlier rounds sits in their bank accounts as the quick commerce Unicorn nears profitability. The latest round is mainly to maintain a strong balance sheet ahead of the IPO launch, he further stated.

“Even with this capital, we want to maintain our discipline, avoid complacency and push hard to hit EBITDA positivity,” Kaivalya Vohra, Co-founder and CTO of Zepto said on the latest funding. “We are building one of the best supply chain product stacks in the country today,” he added.

In line with its IPO goal, the company aims to hit the EBITDA positive mark in the next 12-15 months. Amidst the intensified competition in the segment, the company has managed to demonstrate substantial growth with a 300 per cent year-on-year increase in sales. Founders intend to reach $1 billion in annualised sales in the upcoming quarters.

‘Quick Delivery’ of Great Growth

Zepto plans to use the funds to expand to newer cities as well as to go deeper into the seven Indian metro cities it is currently present. The Founders claim that most of the dark stores are generating cash, are EBITDA positive and the rest are set to reach the mark in the next 12-15 months.

"In the last 24 months, operating in a bear market has forced us to be more mindful of every penny and to take high-quality decisions. There is no growth or profit, it has to be both,” Palicha emphasised while sharing his experience.

Zepto’s growth covered a journey from a monthly cash burn of Rs 90 crore in September 2022 to now, clocking consistent monthly revenue of around $50-60 million. With a sharp 70 per cent decline, Founders revealed that the monthly cash burn as well as customer acquisition cost, are on a downward trajectory, not so far from zero.

The Mavericks: 19-year-old Founder Duo

Zepto disrupted the quick-commerce market in India about two years ago. Its massive scale and growth have outshined most of the peer players as Swiggy and Dunzo have been around for nearly a decade.

Getting groceries delivered the same day, forget on time, was not a norm earlier. These two childhood pals were confined to their houses in Mumbai because of lockdown restrictions. The teenage duo, in 2020, soon realised that there was an opportunity to build a business by doing rapid home-delivery of groceries.

The 19-year-old Standford dropouts founded Zepto in April 2021, a 10-minute grocery delivery startup backed by Y Combinator, as their second venture.

Aadit Palicha and Kaivalya Vohra have thrived through by all the challenges of the high cash burn segment business. Following a huge spike in demand, the platform recorded massive growth.

Zepto’s Co-founder and CTO, 19-year-old Kaivalya Vohra also got listed as the youngest richest Indian in the IIFL Wealth Hurun India Rich List 2022.

Tapping India’s Larger FMCG Market

While the founding duo foresee its foray into other categories, they have no immediate plans in place as such. “Grocery is the mother of all categories and that is our DNA,” Palicha stated.

Zomato’s Blinkit, Reliance-backed Dunzo, Tata’s BigBasket and SoftBank-funded Swiggy directly compete with Zepto. Even among them, Zepto's CEO Aadit Palicha said the company has the quickest average delivery time of 13 minutes.

Grocery can be considered the largest consumer opportunity that exists in the market today. “We have successfully cracked the delivery of groceries, fresh produce and other everyday essentials in the on-demand commerce space,” Zepto’s Co-founder and CEO, Palicha candidly commented.

The Long-term Vision

Zepto’s Co-founder and CTO, Vohra said that the Zepto team plans to be heads-down executing for the next year with the aim of building a better business every day.

Reflecting, Zepto’s Aadit Palicha said that our culture of deep frugality and worshipping customers has gotten us here.

According to him, their customer obsession, operational excellence, fiscal discipline and high-quality talent have been the bedrock of its growth since the start. The future looks incredibly promising as Zepto continues to redefine this landscape.

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