Zepto, a 10-minute grocery delivery startup, has raised $60 million (~Rs 444 crore) from US-based growth equity funds Glade Brook Capital, Nexus Venture Partners, and Y Combinator, bringing the startup funding spree to a new record.
The early-stage round also saw participation from individual investors such as former head of US-based fintech company Stripe – Lachy Groom; the former chief business officer of WhatsApp – Neeraj Arora; and Microsoft executive – Manik Gupta, which valued the startup at $225 million (~Rs 1,665 crore).
The proceeds will be used to strengthen the company’s operations across the country and to boost its human capital. The Mumbai-based startup plans to grow its corporate workforce from 300 people to 900 in the next few months. Zepto is looking to expand across Mumbai, Bengaluru, and Delhi-NCR, and will launch in Hyderabad, Chennai, Pune, and Kolkata in the next 30 days. It also plans to setup to 100 dark stores, thereby servicing moer than 100 pin codes, by the end of this year.
Zepto, founded in June 2021 by two 19-year-old Stanford University dropouts Aadit Palicha and Kaivalya Vohra, claims to be consistently delivering groceries and essential items in 10 minutes through a combination of technical and operational competence using its optimized network of ‘dark stores’ or micro-warehouses.
Kaivalya Vohra, Co-founder and Chief Technical Officer of Zepto explain the process, “Simply put, customers love a rapid delivery experience. The data speaks for itself – once we started delivering in 10 minutes, our NPS shot up and has constantly remained at around 85 with a 50%+ Week-on-Week user retention rate, which shows the incredibly strong customer love for our product.”
While CEO Palicha said, “Q-Commerce in India is an opportunity of epic proportions and strong unit economics. We’ve been ignoring the noise and executing heads-down for a long time to perfect this model, and our efforts are paying off.” Adding further he said, the service’s revenue was increasing by 200 percent month over month, without revealing actual figures. Zepto’s average delivery time, according to him, is roughly eight minutes.
Zepto has also put together a robust workforce to help them manage their rapid expansion. Its management team includes senior executives from some of the country’s most successful startups, such as Flipkart, Dream11, Pharmeasy, Pepperfry, and Uber to name a few.
Express delivery is not a revolutionary concept, since most existing e-grocers have explored it in the past with limited success. Following the sudden growth in demand of online grocery due to the Covid-19 pandemic, these platforms have been bringing back quick deliveries to consumers, primarily under the dark-store concept.
According to the research firm RedSeer, quick commerce will reach $300 million by the end of this year and will expand to $5 billion by 2025. In India, quick commerce can reach over 20 million households, with estimated potential market size of nearly $50 billion in 2020.