10-minute grocery delivery unicorn Zepto once again raises $665 million at a $3.6 billion valuation

Mumbai-based Zepto, which claims to deliver groceries within 10 minutes, has once again raised $665 million in a Series F funding round at a valuation of $3.6 billion.

The current valuation has more than doubled from its previous figure of $1.4 billion, which it achieved last year following a $200 million funding round.

The latest round was co-led by Glade Brook, Nexus, and StepStone Group. Other significant investors include Avenir, Lightspeed, Avra (a new fund by Anu Hariharan), Goodwater, Lachy Groom, and Contrary. DST Global, an early backer of Swiggy, another major player in the quick commerce space, also participated in this round.

A highly competitive market

Founded in 2021 by Stanford dropouts Kaivalya Vohra and Aadit Palicha, Zepto operates in the highly competitive quick commerce market, delivering groceries, household items, and electronic accessories to urban Indian consumers within minutes. 

The startup uses a network of "dark stores"—small warehouses located close to high-demand areas. This allows the three-year-old startup to ensure swift delivery times.

Currently, It has over 50,000 delivery partners, adding about 5,000 new partners each month, and plans to expand its dark store network to 700 by March 2025.

At present, Zepto has around 350 dark stores in 10 cities, including including Bengaluru, Chennai, Delhi, Ghaziabad, Gugaon, Hyderabad, Kolkata, Mumbai, Noida, and Pune.

Is it profitable?

No, Zepto is not a profitable startup yet, but its revenue from operations increased by 1,300% to Rs 2,024 crore in FY23, up from Rs 140.7 crore in the previous year.

The startup’s losses also widened by 226% to Rs 1,272 crore for the period, compared to Rs 390.3 crore a year ago, according to filings with the Ministry of Corporate Affairs.

Zepto's gross merchandise value (GMV) has grown by 140% year-on-year, now exceeding $1 billion annually. Notably, around 75% of its dark stores are EBITDA positive as of May 2024.

According to CEO Palicha, the stores take six months to achieve profitability from 23 months earlier. This rapid turnaround in store profitability has enabled Zepto to scale quickly while maintaining fiscal discipline.

It's worth noting that Zepto is also preparing to launch its initial public offering (IPO) in 12-15 months and aims to turn profitable before listing. "If we are able to achieve this while continuing to delight customers, I believe we will be ready to go public relatively soon," Aadit Palicha said.

Aiming to add new categories

Zepto aims to expand beyond delivering groceries by adding new categories such as household appliances, undergarments, toys, beauty products, and home and kitchen items.

While some competitors like Blinkit are venturing into high-ticket items like smartphones and gaming consoles, Zepto prefers to focus on lower-stake purchases. 

Co-founder and CTO Kaivalya Vohra emphasised that Zepto plans to launch new projects to enhance customer experience, including the Zepto Pass membership program, and to continue hiring top talent across various domains.

Last year, Zepto partnered with shared electric two-wheeler mobility startup Yulu as part of its plans to move to an all-electric vehicle fleet and maximise green deliveries.