Quick commerce firm Zepto valued at $900 million, gets $200 million

  • on May 5, 2022
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Quick commerce firm Zepto valued at $900 million, gets $200 million

Quick commerce firm Zepto valued at $900 million, gets $200 million

Zepto valued at $900 million, gets $200 million: Mumbai: Quick commerce startup Zepto has closed a $200 million funding round led by existing investor YC Continuity Fund, the growth-stage fund run by Silicon Valley’s famed accelerator Y Combinator.

Zepto’s valuation has hit $900 million after the latest round. This is a nearly 60% jump compared to the previous fundraising in December last year when it was valued at $570 million. Quick commerce refers to deliveries made in 15-30 minutes.

New investor Kaiser Permanente joined the latest round along with existing backers including Nexus Venture Partners, Glade Brook Capital, and Lachy Groom.

The Mumbai-based startup, which promises grocery deliveries in 10 minutes, faces intense competition from well-capitalized rivals like Swiggy, Reliance Industries-backed Dunzo, and Tata Digital-owned BigBasket trying to tap the segment through various delivery timings.

Food delivery platform Swiggy has earmarked $700 million to scale up its ultra-fast commerce platform Instamart, chief executive Sriharsha Majety said in December last year.

Ultra-fast commerce firms, which gained prominence during the Covid-19 pandemic, have been questioned about their unit economics and high cash burn, which in some cases has gone up to $10-$15 million per month.

In the United States and Europe, consolidation has already begun in the segment, with some of the well-funded startups like the SoftBank Vision Fund-backed GoPuff valued at $15 billion preparing layoffs to reduce costs, San Francisco-based tech publication The Information reported in March.

Another Zepto rival, Gurugram-based Blinkit (earlier known as Grofers), is in the advanced stages of closing a merger with food delivery app Zomato after struggling to raise new capital from external investors amid increased competition.

The Zomato deal is likely to value Blinkit at around $750 million, lower than when it had raised its last round, ET reported on March 17.

Swiggy’s Instamart, too, has moved away from its aggressive campaigns for 15-minute deliveries.

“It is getting clearer in the space that there will be an Amazon and Flipkart-type of scenario… and for us, the intent was to accelerate that trend,” Aadit Palicha, co-founder and CEO of Zepto told ET. “The objective here is just to get into a position where we have enough currency to start consolidating in the next year.”

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According to Palicha, Zepto will also use the funds to grow its product and tech teams to over 1,000 people in a few months, including engineering, analytics, operations, marketing, finance, and human resources.
“We posted 800% quarter-on-quarter revenue growth, while our burn has come down five times on a per-order basis,” he said.
Picha said Zepto was on track to close the current financial year at $1 billion in gross merchandise value (GMV). According to industry sources, Zepto’s monthly cash burn is said to be around $10-$15 million. Palicha did not, however, confirm this number.

Zepto will utilize the funds to take its presence to 24 cities in the next year from the existing 11, including non-metro cities.

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