Zepto, an instant grocery startup established by two Stanford University dropouts aged 20, has secured new funding at a valuation of $1.4 billion, making it a rare Indian unicorn in a challenging venture funding landscape.
StepStone Group, along with Goodwater Capital and other investors, collectively invested $200 million in the Mumbai-based company, as announced in a statement on Friday. Zepto, supported by startup incubator Y Combinator, plans to achieve profitability within 15 months and has intentions to go public within two to three years.
Childhood friends Aadit Palicha and Kaivalya Vohra left Stanford’s computer science program to return to India and establish the startup while still teenagers. They currently hold the distinction of being the youngest founders of an Indian unicorn.
Palicha, speaking over a video conference, highlighted the rapid growth of the quick commerce sector in India, stating, “Quick commerce is India’s fastest-growing consumer internet category, scaling far more rapidly than segments like ride-hailing and food delivery. We are India’s fastest-growing consumer internet company and will be Ebitda-positive within 15 months.”
Despite the global challenges faced by the quick commerce segment, with startups like Gopuff and Getir making job cuts, Zepto is navigating competition from Indian rivals such as Dunzo, Blinkit, and Instamart.
This funding round arrives during a period of diminished startup momentum globally. Data from Tracxn Technologies Ltd. indicates a 72% decline in venture funding during the first half of the year compared to the same period in 2022. Furthermore, no new unicorns were established in India during the first half, unlike the 19 unicorns created in the same period the previous year.
Founded in July 2021, Zepto now operates more than 220 “dark stores,” which are essentially neighborhood warehouses, across cities like Mumbai, Bangalore, and New Delhi, with plans for expansion. Its initial backers include Nexus Venture Partners and Lachy Groom.
While giants like Amazon and Flipkart are present in India’s $1 trillion retail market, online sales still constitute a small portion of the overall market. Zepto reported a 300% growth in sales in March compared to the previous year, with annual revenue surpassing $600 million, according to Palicha. The average delivery time is 12 minutes, and Zepto stores carry over 7,000 products.
Palicha emphasized, “There’s a lot of skepticism around quick commerce. If we execute well, we are in a position to build an Amazon.com-type business.”
