Mumbai, August 26, 2023 – In a remarkable stride for the Indian entrepreneurial ecosystem, Zepto, a quick commerce startup, has secured an impressive $200 million through a Series E funding round.
With this investment, Zepto’s valuation now stands at $1.4 billion, making it the first startup of 2023 with unicorn status in India.
StepStone Group, an asset management firm based in the US, led the funding round, joined by Goodwater Capital and Zepto’s pre-existing investors – Nexus, Glade Brook Capital, and Lachy Groom.
The timing of this investment is significant, given that 2023 has presented numerous difficulties for the Indian startup community.
Unlike previous years, the initial unicorn emerged in August, a notably delayed timeline, showcasing a shift to a more cautious funding atmosphere influenced by economic complexities faced globally and locally, such as surging inflation and the persisting Russia-Ukraine war leading to market uncertainty.
The rising inflation and economic slowdown affect the quick commerce sector directly. The procurement of goods, delivering them to customers, rising labor costs, and the government’s requirement of having a physical presence in the cities they operate in, all make the process way too expensive.
Despite that Zepto focused on profitability and earned an annual revenue of more than $700 million and 300% year-on-year sales by having a tight cost structure. This resonated strongly with investors, underlining the company’s potential for sustained success.
With a footprint spanning 11 Indian cities and an active user base far exceeding the 4 million mark, the immediate roadmap for the next few quarters involves expanding its operations to 20 cities, increasing its annualized revenue to $1 billion, and getting IPO-ready with positive EBITDA metric company-wide.
Aadit Palicha and Kaivalya Vohra’s 2-year-old startup’s growth has been awe-inspiring, cementing its status as a pivotal player in swift commerce.
However, the achievement at hand is rooted in the groundwork laid by their previous venture, KiranaKart. Zepto’s success is largely due to the strategic timing of its launch. It entered the market in 2021, coinciding with the COVID-19 pandemic when people were more inclined toward remote living and online grocery shopping.
In contrast, KiranaKart debuted in 2015, when people didn’t feel the need to get groceries home-delivered. This underscores the significance of understanding the market demand for one’s services.
Conducting thorough market research and gaining insights into the timing and preferences of potential customers is important. This approach is precisely what we emphasize at EDGE.
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