Zepto on Friday said it has raised $200 million in a Series E round led by StepStone Group, making the quick commerce startup founded by two teenagers, the first to become a unicorn in 2023.
The Mumbai-headquartered firm, which is now valued at $1.4 billion, said it plans to go public by 2025 as a profitable company.
Zepto, which competes with Reliance-backed Duzno, Swiggy Instamart, and Zomato-backed Blinkit, was launched by Aadit Palicha and Kaivalya Vohra who dropped out of Stanford University to grab a share of the fast-growing quick commerce market in India. They are vying for the attention of online shoppers in India’s $1 trillion retail industry along with giant players Amazon.com and Walmart-backed Flipkart.
The company now claims that its burn has reduced significantly, is expected to be fully EBITDA positive in 12-15 months and achieve $1 billion in annualised sales within the next few quarters.
Zepto’s latest fundraise is StepStone Group’s first direct investment in an Indian company. Goodwater Capital also joined the round as a new investor. Existing investors, like Nexus Venture Partners, Glade Brook Capital, Lachy Groom and others, also participated in the round, Zepto said.
The startup plans to use the funds to go deeper into the seven Indian metros it is currently present in, including Delhi, Mumbai and Bengaluru, where it makes a monthly revenue of $50-$60 million, Palicha told Reuters.
“Even with this capital, we want to maintain our discipline, avoid complacency, and push hard to hit EBITDA positivity,” Vohra said.
In just nine months of being launched in May 2022, the company had raised $200 million in a funding round led by existing investor YC Continuity Fund (a growth-stage fund run by Silicon Valley’s accelerator Y Combinator), touching a valuation of $900 million.
According to proprietary data compiled by DealStreetAsia, no Indian startup has made it to the unicorn club in nearly three quarters, the longest dry spell since 2018. This is in sharp contrast to the past 2-3 years when numerous unicorns sprung up to decisively reshape the Indian startup ecosystem and spur growth.
Unicorn creation has been declining sharply year-over-year, with 24 private startups topping the billion-dollar mark in 2022, down from 45 in 2021 — the highest in a year so far — as rising inflation and interest rates continue to impact investments significantly amid a deepening funding winter.
Goa-based Molbio Diagnostics was the last to turn unicorn in September 2022 after raising $85 million in a funding round led by Singapore-based Temasek. As of May 31, 2023, India is home to 108 unicorns with a total valuation of $340.80 billion.