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.”

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.