Zepto, a fast commerce business based in India, aims to raise funds to fund 700 dark stores by March 2025, doubling its current number of warehouses in India. The company’s recent fundraising, which was revealed on Friday, brought in a valuation of $3.6 billion. Its current valuation is around 2.6 times higher than that of its previous funding round.
From Startup to Unicorn: Zepto’s Journey
Zepto was started in 2021 by then-19-year-olds Aadit Palicha and Kaivalya Vohra, who dropped out of Stanford University’s undergraduate computer science degree to launch a grocery delivery business. Since then, it has expanded to supply anything from toys to garments, and by gross merchandise value, it has risen to become one of India’s biggest players in rapid commerce, competing with companies like BigBasket, operated by the Tata Group, and Blinkit, a division of Zomato, and Instamart, a division of Swiggy.
“This dynamic of stores turning profitable faster and faster has enabled Zepto to grow at a rapid pace and achieve near EBITDA positivity at the company level,” said Palicha, the CEO and co-founder of Zepto, in a statement. “We intend to maintain our financial discipline as we grow from 350 to 700 stores by reinvesting capital from established stores back into the company.”
About 75% of Zepto’s warehouse locations are now turning a profit, and as of May, the company says it is on target to produce over $1 billion in GMV in the current fiscal year, which ends in March 2025. It further stated that it now takes six months for the stores to turn a profit, as opposed to 23 months in the past.
Palicha stated that if the trend keeps up, the company “will be ready to go public relatively soon.” Palicha and Vohra were included on Forbes’ 30 Under 30 Asia list in 2022.
Zepto raised $665 million from new investors in its most recent investment round, which was revealed on Friday. These investors included the venture capital firm Lightspeed, the private equity firm Avenir, and Avra, a new fund founded by Anu Hariharan, the former head of Y Combinator Continuity. The Indian unicorn said in a statement that previous backers Glade Brook Capital Partners, Nexus, and StepStone Group also invested in the round. The company raised $235 million in December at a valuation of $1.4 billion, and this round of funding comes just nine months later.
Paul Hudson, chief investment officer of Glade Brook, said in the statement: “Zepto is redefining e-commerce in India, with uniquely strong product-market fit and world-class execution and innovation.”
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