Zepto: The Indian Startup That Raised Fresh Funds at a Whopping Valuation of $900 million

Zepto, an Indian grocery startup, announced that it had raised $200 million in new funding, valuing it at roughly $900 million, indicating increased investor interest in a sector where competitors are wooing customers with speedy 10-minute delivery.

About the Founders of Zepto

Last year, two 19-year-old Stanford dropouts founded Zepto. Y Combinator, a notable Silicon Valley fund, led the company's most recent fundraising round.

The Participants Involved in Funding the Startup

The funding round witnessed a new investor, Kaiser Permanente of the United States, along with the Zepto's existing investors, including Nexus Venture Partners.

A Glance at Zepto’s Competitors

In India, Zepto competes with SoftBank-backed Blinkit, both of which offer 10-minute grocery deliveries.

Other rivals, including Dunzo, backed by Indian billionaire Mukesh Ambani's Reliance, and SoftBank-backed Swiggy, are betting on fast deliveries in the so-called quick commerce sector.

All About Zepto’s Mainstream Services

The company currently operates in 11 cities and wants to expand to as many as 24 more cities in the next quarter with the new financing.

Zepto merely took a few months to attain the scale it took food delivery firms years to achieve (with groceries). Although the grocery business is much larger, most people use that as a yardstick.

Quick Commerce and Short Distances Go Hand-in-Hand

Foreign investors flock to the country's tech firms to cash in on the expanding usage of digital payments, the internet, and cellphones in the South Asian market.

India's 'fast commerce' sector, which was worth $300 million last year, is expected to grow 10-15 times to $5 billion by 2025. The Indian grocery retailing industry is far more extensive, with a market value of $600 billion.

While the industry is flourishing, Reuters reported in January that speedy delivery services in India had prompted road safety issues for delivery motorcycles, citing India's high accident rate.?

Blinkit and Zepto drivers previously told Reuters that they were under pressure to make delivery dates, which often led to speeding to avoid being reprimanded by store managers.

In defense of Zepto's practices, it was claimed that drivers only travel modest distances of an average of 1.8 km to deliver orders and do not rush. After all, quick trade is about travelling short distances rather than travelling quickly.

Zepto’s Striking Revenue Through Its Operations in the Segment?

Zepto generates average monthly revenue of $12 million but spends roughly $8 million on marketing, advertising, and other activities such as free deliveries.

The model that Zepto follows has been tested all across the world. Companies have shown operating profits in Turkey and Russia.

The Plans Ahead for Zepto’s Noteworthy Expansion

The business plans to use the new funding to expand its 10-minute grocery delivery service nationally and sustainably develop.?

Zepto intends to expand its business to 24 cities in the coming year, up from 11 now.?

The funds will be utilized to expand Zepto's product and tech teams to over 1,000 individuals in a few months.

The Final Words Encircling Zepto and The Way It Carries Out the Business?

Zepto, a rapid commerce business founded by two 19-year-old Stanford graduates, has raised $200 million and is now valued at $900 million! The Mumbai-based business confronts fierce competition from well-capitalized companies like Swiggy, Reliance Industries-backed Dunzo, and Tata Digital-owned BigBasket as the 10-minute delivery model gains traction. For the uninitiated, Zepto offers 10-minute supermarket deliveries.

The goal for Zepto right now is to get into a position where it has enough currency to begin consolidating next year. Revenue increased by 800% quarter over quarter over quarter, but burn decreased by five times on a per-order basis. Thus, it would not be wrong to say that Zepto has lucrative future prospects in the industry.