A company named Zepto emerged as a unicam, which is currently operating in the quick commerce segment and achieved the unicorn status for the first time in India in 2023 with the valuation of USD 1. In this Series E round, Zenefits is expected to get $200 million, which will take the company’s value to $4 billion. Tech Factors Software was valued at $800,000 in a seed VC round led directly by StepStone Group which invested in any Indian company for the first time along with new investors, Goodwater Capital and existing investors Nexus Venture Partners, Glade Brook Capital and Lachy Groom.
PC: Incubees
Zepto was co-founded by Kaivalya Vohra and Aadit Palicha in the year 2021 to become a quick commerce dedicated company that ensures the delivery of 6000 grocery items at the doorstep with a delivered time of 10 minutes. Thus, while it may not operate across several reaches, the model has been embraced by many consumers mainly located in the metro cities such as Mumbai, Delhi-NCR, Bengaluru, Hyderabad, Chennai, Pune, and Kolkata. However, with high cash consumption rates and the difficulties associated with unit economics as an issue to be addressed when contacted with regards to swift trade environments, the viability and longevity of quick commerce have always been under questions.
However, Zepto, in the process, came through with the reduction of cash burn by 70% year on year, driven by a leap in sourcing efficiency, productivity at dark stores, and supply chain optimization. The new capital will majorly go towards increasing the current presence of Zepto in these leading cities, with a focus on achieving market density to promote profitability and growth. Palicha, for his part, emphasized a disciplined approach to reach EBITDA-positive within the coming 12 to 15 months. This push towards profitability becomes critical for preparation for an initial public offer by early 2025. Zepto grows at a very impressive rate as it reports 300% year-on-year growth in sales.
Within the next couple of quarters, the company is going to hit the milestone of $1 billion as annualized sales when, currently, in the critical markets, its monthly revenue is from $50 million to $60 million. This growth, combined with its concentration on operational efficiency, has helped Zepto find a place as a major player in the competitive quick commerce space, sharing the stage with other big players: Swiggy’s Instamart and Blinkit, owned by Zomato. The funding round and the proposed strategic investments are part of a much bigger plan of being able to build a sustainable, profitable business model in the quick-commerce space. The founders were confident about their ability to execute and the company’s frugal and customer-centric culture. That fact itself seems to be a concern for deeply detailed, high-quality investors like StepStone and Goodwater Capital but can only reinforce the business model and growth validation further for Zepto in such a hard market environment.
However, the fact remains that Zepto was able to go from start-up to unicorn in a little over two years, reiterating the potential the quick-commerce space has in the Indian market today. In this background, the latest funding would help Zepto further consolidate its market position, beef up its technological and product offerings, and sustain its growth momentum with fair attention still focused on attaining profitability. Equipped with this strategic focus and the strong backing by highly experienced investors, Zepto should stand good to overcome the challenges inherent in this quick commerce sector and emerge as the leader of the pack in the Indian market.
