Zepto raises $200 million, becomes first unicorn of 2023

New Delhi: Online grocery delivery startup Zepto has raised $200 million in Series-E fundraise, valuing the company at $1.4 billion, and making it the first unicorn of 2023.

The fundraise was led by US-based private markets investment firm StepStone Group, Zepto, set up in the aftermath of the pandemic, on Friday said. 

The investment also marks StepStone Group’s first direct investment in an Indian company. 

Additionally, Goodwater Capital, a consumer-focused venture capital firm based in California, joined the round as a new investor. Notably, existing investors, like Nexus Venture Partners, Glade Brook Capital, Lachy Groom and more, doubled down in Zepto with meaningful follow-on investments.

In 2022, Zepto had raised $200 million in a Series D funding round led by American technology startup accelerator Y Combinator’s Continuity Fund, which then valued the quick commerce firm at $900 million. Zepto, founded in 2021 by Stanford University dropouts, Aadit Palicha and Kaivalya Vohra, is also eyeing a public market listing in the next two-to-three years. In May this year, Zepto elevated several key executives in the run-up to its plans to list.

Zepto essentially delivers over 6,000 grocery products in 10 minutes through a network of delivery hubs across the country. The model has come to be known as quick commerce but has been questioned for its high cash burn and the lack of a sustainable business model.

“This fundraise, in the midst of the deepest downturn in capital markets in over a decade, validates Zepto’s bestin-class operating discipline. Zepto has proven the quick commerce business model by turning the majority of its dark stores fully EBITDA positive. Zepto’s burn has reduced significantly, and with this trajectory, the company will be fully EBITDA positive in 12 to 15 months. More importantly, Zepto has delivered these profitability numbers while continuing to grow rapidly,” Zepto said in a statement.

The company has grown its sales by 300% year-on-year and will likely achieve $1 billion in annualized sales within the next few quarters, it said.

“This business is about execution and we are succeeding because our execution is strong. Our culture of deep frugality and worshipping customers has gotten us here, but there is still so much for us to achieve. We are in this to build a generational company and it truly feels like this is just the beginning,” said Aadit Palicha, co-founder and CEO, Zepto.

News of funding comes amid a stiff cash crunch faced by other quick delivery platforms such as Dunzo.

“Even with this capital, we want to maintain our discipline, avoid complacency, and push hard to hit EBITDA positivity. In that journey, the biggest drivers of P&L improvement for us are based on technology and product,” said Kaivalya Vohra, co-founder and CTO, Zepto.

Avendus Capital acted as an exclusive advisor to Zepto on the deal.