Zepto, a two-teenager-founded immediate grocery delivery business, has secured $100 million in a fundraising round led by Y Combinator, bringing its valuation to $570 million just five months after launching services in India’s brisk quick commerce industry.
The startup’s latest fundraising comes 45 days after a prior capital round of $60 million at a valuation of $225 million, according to Aadit Palicha, co-founder and CEO, in an interview. In addition to Y Combinator’s Continuity Fund, the current round included investments from new and previous backers such as Glade Brook Capital Partners, Nexus Venture Partners, Breyer Capital, and Silicon Valley investor Lachy Groom, according to a statement from the startup.
Zepto, called after a minuscule unit of time, was founded by Palicha and his close buddy Kaivalya Vohra, both 19, who dropped out of Stanford University’s prestigious computer science program to return to India and get started in quick commerce. The startup began in Mumbai earlier this year and has already expanded to Bangalore, Delhi, and four other cities, promising to deliver groceries and everyday necessities in 10 minutes.
In India, a $1 trillion retail market where food purchases make for the majority of retail expenditure, online grocery delivery is taking momentum. Zepto competes with firms such as SoftBank Group Corp.-backed Blinkit, Google-backed Dunzo, and Naspers Ltd.-backed Swiggy, as well as Amazon.com Inc. and Walmart Inc.-backed Flipkart.
Zepto is growing quickly and its core unit economics are strong, Palicha said in the statement. Delivering within 10 minutes is “game changing,” said co-founder Vohra, the chief technology officer. The new capital will allow the Mumbai-based startup to grow its team and expand to more cities.
The company operates 100 so-called dark stores, or micro-warehouses, in high-demand districts, and it employs technology to perform tasks such as determining store sites, product placement, and mapping out delivery routes to minimise traffic congestion. It currently delivers over 2,500 products every week, including fresh fruit, kitchen basics, snacks and drinks, personal care goods, and house cleaning supplies.
According to Anu Hariharan, a partner at Y Combinator’s Continuity Fund, the founders bring “Doordash-like” execution to the quick commerce concept. According to the statement, the startup is acquiring 100,000 new customers every week.