Zepto bags $200 million at a valuation of $1.4 billion

Zepto is the first company in the nation to surpass the billion-dollar valuation milestone in almost a year after raising $200 million in new capital with a valuation of $1.4 billion. According to Zepto, it obtained the funds from American investment firms StepStone Group and Goodwater Capital "in the midst of the deepest downturn in capital markets in over a decade." Existing backers Lachy Groom, Glade Brook Capital, and Nexus Venture Partners all took part in the transaction.

Zepto is also considering a public listing in the next two to three years. It currently runs more than 200 dark stores which ship everything from chips to diapers, notebooks, cooking oil and cigarettes in seven cities. In 2022, Zepto had raised $200 million in a Series D funding round led by US technology startup accelerator Y Combinator’s Continuity Fund, which then valued the startup at $900 million.

Quick commerce firms proliferated following the pandemic outbreak, with platforms such as Zomato’s Blinkit and Swiggy’s Instamart offering home delivery of products such as shampoos, soaps, vegetables, and tea, which customers typically buy from local stores. However, the model has been questioned for its high cash burn and for delivering goods otherwise available easily in local markets. 

Palicha, CEO of Zepto, said, Zepto plans to add 40% more dark stores over the next 12 months while also reducing the time taken for each of these stores to turn profitable. “We’re going to push even harder towards profitability. The idea is to get to Ebitda positive in the next 12 to 15 months and do it at a scale of well over a billion dollars in sales annually. The majority of our dark stores are fully Ebitda-positive... The trajectory that we were on with 150 dark stores or so that are already profitable, with most of our dark stores already generating cash, the entire company is likely to be Ebitda-positive in the next 12 to 15 months. We have been actually able to grow our sales 300% year-on-year, reduced burn at the same time and turn most of our stores profitable," he said.