StepStone Group, a private markets investment firm based in the United States, spearheaded the fundraising, with Goodwater Capital joining as a new investor.
New Delhi, India – Zepto, an online grocery delivery firm, has raised $200 million in Series-E funding, valuing the company at $1.4 billion and making it the year’s first unicorn.
The fundraise was led by StepStone Group, a US-based private markets investment business founded in the aftermath of the pandemic, on Friday.
This is also StepStone Group’s first direct investment in an Indian firm.
In addition, Goodwater Capital, a consumer-focused venture capital firm based in California, participated in the round as a new investor. Notably, previous investors such as Nexus Venture Partners, Glade Brook Capital, Lachy Groom, and others doubled down on Zepto with significant follow-on investments.
In 2022, Zepto raised $200 million in a Series D fundraising round sponsored by American technology startup accelerator Y Combinator’s Continuity Fund, valuing the rapid commerce firm at $900 million. Zepto, created in 2021 by Stanford University dropouts Aadit Palicha and Kaivalya Vohra, is also planning a public market IPO in the following two to three years. In preparation for its upcoming IPO, Zepto promoted several senior executives in May of this year.
Zepto essentially distributes over 6,000 supermarket products in 10 minutes across the country via a network of delivery hubs. The technique, known as fast commerce, has been criticized for its high capital burn and lack of a viable business plan.
“In the midst of the worst downturn in capital markets in over a decade, this fundraise validates Zepto’s best-in-class operating discipline.” By turning the majority of its dark stores entirely EBITDA positive, Zepto has demonstrated the fast commerce business model. Zepto’s burn rate has decreased dramatically, and if current trends continue, the company will be entirely EBITDA positive in 12 to 15 months. More importantly, Zepto has produced these profitability figures while rapidly expanding,” Zepto said in a statement.
According to the corporation, revenues have increased by 300% year on year and will likely reach $1 billion in annualized sales within the next several quarters.
“This business is about execution, and we’re succeeding because we execute well.” Our culture of deep frugality and customer adoration has brought us this far, but there is still so much more for us to accomplish. “We’re here to build a generational company, and it truly feels like we’re just getting started,” said Aadit Palicha, co-founder and CEO of Zepto.
The news of funding comes as other quick delivery services, such as Dunzo, are facing a cash crunch.
“Even with this capital, we want to maintain our discipline, avoid complacency, and work hard to achieve positive EBITDA.” “The biggest drivers of P&L improvement for us in that journey are based on technology and product,” said Kaivalya Vohra, co-founder and CTO of Zepto.
Avendus Capital served as Zepto’s sole advisor on the transaction.