Five Months Into Launch, Quick Commerce Startup Zepto Raises $100 Mn At $570 Mn Valuation

Mumbai-based 10-minute grocery delivery app startup, Zepto, has announced its $100 Mn Series C fundraise led by Y Combinator’s Continuity Fund at a valuation of $570 Mn. The round also saw participation from new and existing investors Glade Brook, Nexus, Breyer Capital, Lachy Groom, Global Founders Capital, Contrary Capital, and others. 

This Series C round comes on the back of its $60 Mn fundraise in November, led by Glade Brook Capital, Nexus, and Y Combinator, and participation from angel investors such as Lachy Groom, Neeraj Arora, Manik Gupta among others. The round was raised at a valuation of $200 Mn-$300 Mn, the startup said in a statement.

With this infusion, Zepto plans to expand coverage across multiple cities in India and scale its team rapidly. It is currently hiring across all functions, including operations, supply chain, marketing, finance, product, engineering, and human resources.

Zepto (formerly KiranaKart) was founded in 2020 by two 19-year-old Stanford dropouts Aadit Palicha and Kaivalya Vohra; it only came out of stealth mode in August 2021. Zepto had started with a grocery app, enabling customers to order groceries and get them delivered within an hour from high-quality stores in their community. It quickly pivoted to the quick commerce segment and now promises to deliver up to 90% of grocery orders in less than 10 minutes.

It has operations across Mumbai, Delhi, Gurugram, Bengaluru, Pune, Chennai, Hyderabad with plans to launch in Kolkata soon. Zepto claims to be onboarding 100K+ new installs weekly with a 65% retention rate.

Kaivalya Vohra, who is also the CTO of the startup said, “Delivering groceries in 10 minutes is a game-changing experience for customers. It reflects in our strong product-market fit metrics as today, our month-on-month buyer retention is 65% with an 88-point NPS. This data has given us the confidence to expand the 10-minute model across the country. In just five months, we’ve launched 100 micro-warehouses-each of which has the capacity to do 2,500+ orders/day-and we’re planning to launch at an even faster rate going forward.”

Need For Speed Fulfilled By Quick Commerce

The 15-minute economy, defined by on-demand digital services that cater to clusters within cities, has well and truly arrived in India, underlined by billions of dollars being invested by startups over 2021. According to an IBEF report, the last-mile delivery or the hyperlocal market in India is expected to reach $6 Bn – $7 Bn by 2024.

Zepto has some major competition in this regard, with some of the biggest delivery companies in India vying for a piece of the action. For example, Swiggy claims to fulfil deliveries in 15-30 minutes through its InstaMart service; it also invested $700 Mn in the venture. 

Grofers also announced plans to launch 10-minute grocery deliveries in 10 cities, and thus renamed the brand to BlinkIt. On the other hand, Dunzo promises deliveries in under 20 minutes through its dark store network. Not far behind, BigBasket offers BB Express, which promises deliveries of essentials in 60 minutes, and Ola piloted a quick delivery service in parts of Bengaluru. Recently, seven-year-old Satvacart closed its Pre Series A round of funding while also being in advanced discussions to close a $50 Mn round in early 2022.

Even marketplace giants have hopped onto the dark store bandwagon. Since 2019, Amazon India has promised deliveries in two hours under Amazon Fresh, which it has expanded to more cities in 2021. Walmart-owned ecommerce giant Flipkart is also claiming a similar delivery time for groceries under its Flipkart Quick Service, which it launched last year amid the lockdown period.