The valuation of Zepto has reached $900 million after the latest round. This is a nearly 60% jump from the previous fundraising in December last year, when it was valued at $570 million. Quick commerce refers to the delivery made in 15-30 minutes.
New investors join the latest round along with existing backers including Kaiser Permanente Nexus Venture Partners, Glade Brook Capital and Lachey Groom.
The Mumbai-based startup, which promises grocery delivery in 10 minutes, faces intense competition from well-capitalized rivals such as Swiggy, Reliance Industries-backed Dunzo and Tata Digital-owned BigBasket, which offer different delivery times. Trying to tap the segment through.
Food delivery platform Swiggy has earmarked $700 million to grow its ultra-fast commerce platform Instamart, Chief Executive Officer Sriharsha Majeti said in December last year.
Ultra-fast commerce firms, which gained prominence during the Covid-19 pandemic, were questioned about their unit economics and high cash-burn, which has gone up to $10-$15 million per month in some cases.
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In the United States and Europe, consolidation has already begun in the segment, with some well-funded startups such as the SoftBank Vision Fund-backed Gopf, valued at $15 billion, preparing layoffs to reduce costs, according to a San Francisco-based tech publication. The information was reported in March.
Another Zepto rival, Gurugram-based Blinkit (formerly known as Grofers), is in advanced stages of closing a merger with food delivery app Zomato after struggling to raise fresh capital from outside investors amid increased competition. is in.
ET reported on March 17 that the Zomato deal is likely to cost Blinkit around $750 million, which is lower than the previous round.
Swiggy’s Instamart has also done away with its aggressive campaigns of 15-minute delivery.
Aditya Palicha, co-founder and CEO of Zipto told ET, “It is becoming clear in the space that things like Amazon and Flipkart will happen… and we intended to accelerate that trend.” “The objective here is just to get to a position where we have enough currency to start consolidating over the next year.”
According to Palicha, Zepto will use the funds to expand its product and technical teams to more than 1,000 people in a few months, including engineering, analytics, operations, marketing, finance and human resources.
“We posted an 800% increase in quarter-on-quarter revenue growth, while our burn has reduced five-fold on a per-order basis,” he said.
Palicha said Zepto is on track to close at $1 billion in gross merchandise value (GMV) in the current fiscal year. According to industry sources, Zepto’s monthly cash burn is reported to be around $10-$15 million. However, Palicha did not confirm the number.
Zepto will use this fund next year to expand its presence in the existing 11 cities, including non-metro cities.
Palicha said Zepto will reserve a portion of the funds for possible consolidation in the market.
“The accelerated commerce model works on density dynamics… what people need in Chandigarh is not much different from what they need in Bengaluru or Hyderabad… The objective is that if you look at the top 30 cities in the country, So the density dynamics work well,” he said.
Zepto, he said, was seeing early signs of that adoption in these cities.
Founded by Stanford University dropouts Palicha and Kaivalya Vohra, Zepto launched its accelerated commerce service in April 2021. At the age of 17, Palicha created another startup, GoPool, a mobile application that helped parents in Dubai find and schedule carpools at school.
The startup has raised $360 million to date, including the latest round.
Zepto operates from a network of ‘cloud stores’ or micro-warehouses to fulfill orders within the time frame. These stores, also known as dark stores, are small warehouses located in the heart of a city through which orders can be delivered rapidly.
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ET reported on February 15 that Zepto plans to tap the private label to improve margins and reduce cash burn.
Palicha said private labels will be available on the app in the next one or two quarters. Meanwhile, it is operating a service to deliver coffee, tea and other cafe items in 10 minutes in select areas of Mumbai.
“…we are very excited about this and we will aggressively expand it in the next quarter or so in other cities,” Palicha said.
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