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From 0 to $3.6B: Dark Horse Zepto's Blazing Fast Grocery Delivery Story

Lightning-fast grocery delivery startup Zepto just raised a whopping $665M, valuing them at $3.6 billion! They're planning to double their dark stores and conquer new cities. Can they outpace giants like Blinkit and Swiggy Instamart? Know their story.

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Swati Dayal
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Zepto

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Mumbai-based Zepto, the lightning-fast grocery delivery app, has secured a whopping $665 million in fresh funding, propelling its valuation to a staggering $3.6 billion. This mammoth investment round comes amidst a period of cautious optimism in the Indian quick commerce sector, where investors are meticulously scrutinizing startups before backing them.

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UBS’ estimate for the Indian market

Who Backed Zepto's Meteoric Rise?

The funding round, entirely composed of primary capital, was co-led by seasoned backers Glade Brook, Nexus, and StepStone. These heavyweights reaffirmed their faith in Zepto's potential, contributing the lion's share of the capital. Notably, prominent new investors like Avenir Growth, Lightspeed, and Avra joined the party, further solidifying Zepto's financial foundation.

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Aggressive Expansion Plans for Zepto

Armed with this war chest, Zepto is poised for an aggressive expansion across India. The company plans to conquer new territories like Jaipur, Chandigarh, and Ahmedabad, while simultaneously fortifying its presence in existing strongholds like Mumbai, Delhi, and Bengaluru. To cater to this burgeoning demand, Zepto aims to double its current dark store network from 350 to a commanding 700 by March 2025. This strategy aligns perfectly with industry trends, as competitors like Blinkit, Swigult Instamart, and Tata's BigBasket are also racing to expand their infrastructure.

Non-Metro Cities: A Goldmine for Zepto?

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Zepto's CEO, Aadit Palicha, in a media interview, has shrewdly identified the immense profitability potential that lies in non-metro cities. These regions, characterized by lower existing grocery delivery services, offer significant cost advantages. Cheaper real estate and wages make them prime targets for Zepto's rapid expansion plans. To support this ambitious growth trajectory, Zepto intends to bolster its workforce by around 500 employees, reaching a total headcount of 2,200. These new recruits will spearhead operations and market penetration initiatives.

From Kiranakart to Zepto: A Startup's Journey

UBS’ estimate for the Indian market.

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Zepto's rise from a fledgling startup to a dominant force in the quick commerce space is nothing short of phenomenal. Founded in 2021 by the enterprising duo of Aadit Palicha and Kaivalya Vohra, Zepto began its journey under the name Kiranakart. The company initially collaborated with local grocery stores to facilitate deliveries within Mumbai. Recognizing the vast potential of a wider market, the visionary founders rebranded as Zepto and extended their reach to major metropolitan areas. In 2023, Zepto became the 2nd startup to bag unicorn title in with $200 Million.

Zepto Founders

The COVID-19 pandemic served as a springboard for Zepto's growth. The sudden surge in demand for rapid grocery delivery services played perfectly into Zepto's hands. The company capitalized on this opportune moment, raising $730,000 in its seed funding round and commencing operations in April 2021. Subsequent funding rounds in quick succession – October and December of the same year – saw Zepto raise a staggering $60 million and $100 million, respectively. This continuous inflow of capital propelled Zepto's valuation to a remarkable $570 million. By May 2023, the company had secured an additional $200 million, pushing its valuation to a phenomenal $900 million.

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Zepto operates in over 10 major cities across India, including Mumbai, Pune, Delhi, Noida, Gurugram, Ghaziabad, Kolkata, Hyderabad, Chennai, and Bengaluru. The company offers delivery of over 6,000 products, ranging from fresh fruits and vegetables to dairy, cooking essentials, and health and hygiene products, all within 10 minutes.

The secret sauce behind Zepto's success lies in its meticulously designed business model. The company leverages a robust network of strategically located dark stores, well optimized supply chain management, and cutting-edge technology integration. Zepto's streamlined operations enable them to process and dispatch orders in a mind-boggling 60 seconds, translating to lightning-fast deliveries within 12 minutes. This unparalleled efficiency has been instrumental in building a loyal customer base and fueling Zepto's phenomenal growth.

Zepto's Homecoming: Back to India

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UBS’ estimate for the Indian market.

In a strategic move, Zepto is repatriating its base from Singapore back to India, a homecoming expected to be completed in the coming months. This repatriation reflects a broader trend among Indian startups like Flipkart, Meesho, and Razorpay, which are strategically relocating their headquarters to India in preparation for potential public listings.

Zepto Sets Sights on IPO: Race to profitability

With an IPO on the horizon in early 2025, Zepto is laser-focused on achieving EBITDA profitability within the next 12 to 15 months. The company has made significant strides in reducing cash burn and customer acquisition costs to achieve this ambitious goal. Notably, around 150 of their dark stores are already demonstrating EBITDA positivity, a testament to the effectiveness of their financial strategies. To further bolster their leadership team for this crucial phase of growth, Zepto has strategically appointed Vikas Sharma as Chief Operating Officer and Ramesh Bafna as Chief Financial Officer.

With a comprehensive roadmap, a war chest full of funding, and a leadership team brimming with experience, Zepto is all set to position as a frontrunner in the Indian quick commerce sector. 

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