As it expands into new locations, Zepto, a Mumbai-based startup that provides 10-minute rapid food delivery, has more than quadrupled its valuation to $570 million from $225 million less than two months ago. The $100 million Series C financing in Zepto spearheaded by Y Combinator’s Continuity Fund, the two companies said Monday. Glade Brook, Nexus, Breyer Capital, Lachy Groom, Global Founders Capital, and Contrary Capital were also among the investors in the round, bringing the total amount raised to $160 million.
In November, the firm, which was created by two 19-year-old entrepreneurs who graduated from Stanford last year, came out of stealth mode. However, long before it started talking about the business; Zepto had piqued the curiosity of the local startup community, with people expressing their thoughts on the company. Zepto, whose name is a play on a mathematical word, provides a 10-minute grocery delivery service, a category that has exploded in popularity in recent quarters in numerous areas of the world. Swiggy and BlinkIt (previously known as Grofers), two well-supported players, have also entered the rapid grocery delivery sector.
Zepto’s appearance in the scenario was also coincidental. Aadit Palicha and Kaivalya Vohra had returned to India for a vacation just when the epidemic struck. The adolescents, who had previously worked together on a number of initiatives, including a ride-hailing commuting app for schoolchildren, were suddenly imprisoned inside their Mumbai homes. As the virus spread, the two struggled to procure their groceries, despite the fact that grocery deliveries, which were deemed necessary by the local authorities, were still authorized over most of the country.
“We thought that the online play of the Indian grocery delivery market, which is one of the world’s largest,” Palicha said in a previous interview without going into detail. Picha said in an interview last week that the firm was overwhelmed by consumer support and excitement, but it does not want to “get comfortable.”
“We are a little too harsh on ourselves and hold ourselves to really high standards.” People are pleased when their deliveries arrive in 10 minutes or less, but can we continue to scale our SKUs and improve our unit economics?” he said. (At the same time, he noted, Zepto is concerned about keeping its workers and delivery partners satisfied, citing retention and internal feedback as examples.)
Vohra claims to have a 65 percent month-over-month customer retention rate and has set up a network of micro-warehouses, each of which handles more than 2,500 orders per day. According to a statement from Sanford C. Bernstein, India’s e-grocery sector is expected to be worth $25 billion by 2025. “By 2025, online grocery penetration is predicted to rise to 3-5 percent, up from less than 1% presently.” Rising wealth and prosperity, lower-tier consumption, e-commerce penetration (30 percent CAGR), and a young population (50 percent under 25) are all long-term structural factors. “Grocery spending as a percentage of income remains high, at 30%,” the firm’s analysts noted.
Zepto is now present in Bangalore, Delhi, Gurgaon, Chennai, and Hyderabad, with ambitions to grow to Pune and Kolkata in the near future. It has put up a maze of over 100 dark storefronts throughout these cities, which it claims are geared for speedy delivery, to assure immediate deliveries. He stated, “We’re looking at a fairly ridiculous run rate.” “In just over a month and a half, we’ve increased our revenue by tenfold.” “Right now, we’re aiming for a 10-fold increase by February or March,” Palicha added.