Zepto, an instant grocery startup founded by a duo of Stanford University dropouts, both 20, raised fresh funds at a $1.4 billion valuation, creating a rare Indian unicorn amid a gloomy venture funding climate.
StepStone Group, Goodwater Capital and others invested a combined $200 million in the Mumbai-based company, it said Friday in a statement. Zepto, built with backing from startup incubator Y Combinator, said it’s on track to turn profitable within 15 months and intends to go public in two to three years.
Childhood friends Aadit Palicha and Kaivalya Vohra dropped out of Stanford’s computer science program to return to India and build the startup when they were teenagers. They are now the youngest founders of any Indian unicorn.
“Quick commerce is India’s fastest-growing consumer internet category, scaling far more rapidly than segments like ride-hailing and food delivery,” Palicha said over video conference. “We are India’s fastest-growing consumer internet company and will be Ebitda-positive within 15 months.”
The Series E round comes at a challenging time for the quick commerce segment globally, with startups like Gopuff in the US and Getir in Europe cutting jobs. Zepto itself faces stiffening competition from rivals in India, including Alphabet Inc.-backed Dunzo, Zomato Ltd.’s Blinkit and Naspers Ltd.-backed Instamart.
Startup momentum is sputtering worldwide. Venture funding declined by about 72% in the first half of the year compared with the same period in 2022, according to data from Tracxn Technologies Ltd. No new unicorns were created in the country the first half, compared with 19 unicorns minted in the year-earlier period, according to Tracxn.
Zepto was founded in July 2021 and now has more than 220 so-called dark stores, or neighborhood warehouses, across cities including Mumbai, Bangalore and New Delhi, with plans for expansion. Its early backers include Nexus Venture Partners and Lachy Groom.
India’s $1 trillion retail market has attracted global players like Amazon.com Inc. and Walmart Inc.-owned Flipkart Online Services Pvt, yet online sales still account for a minuscule share of that total. Zepto’s sales in March grew about 300% from a year earlier, and its annual revenue has topped $600 million, Palicha said. Median delivery time is 12 minutes, and Zepto stores stock over 7,000 products, he said.
“There’s a lot of skepticism around quick commerce,” Palicha said. “If we execute well, we are in a position to build an Amazon.com-type business.”