Commerce

Zepto, a 10-minute delivery app, raises $665M at $3.6B valuation

Comment

Zepto founders
Image Credits: Zepto

Zepto has raised a massive $665 million in a new round of funding, more than doubling its valuation to $3.6 billion from $1.4 billion in less than a year, as the Mumbai-based startup doubles down on its efforts to capture the contested quick commerce market in India.

Zepto sells and delivers everything from grocery items to electronic gadgets to consumers in urban Indian cities within a short time frame. The rapid-delivery model is thriving in India even as most startups in the space have cratered in developed markets.

Glade Brook, Nexus and StepStone Group co-led the “highly-oversubscribed” Series F round, Zepto said. Avenir, Lightspeed and Avra (former YC Continuity exec Anu Hariharan’s new fund) as well as existing backers Goodwater, Lachy Groom and Contrary also invested in the round, the startup said.

DST Global, an early backer of Swiggy, a Zepto rival, also co-led the new funding round, according to two people familiar with the matter. Zepto didn’t disclose DST Global’s participation in the new funding round and declined to comment.

Zepto competes with BlinkIt (owned by Zomato) and Swiggy’s Instamart in the quick commerce space.

These quick commerce companies have established numerous discreet warehouses, known as “dark stores,” throughout urban India. By strategically locating these facilities within a few miles of high-demand residential and commercial areas, they can fulfill orders within minutes of purchase.

“Because less space is needed to stand up a dark store than normal storefronts, Zepto can create a wider network of stores across a city allowing for short delivery times,” Will Robbins, a partner at Contrary, wrote in his thesis.

Zepto aims to expand its network of dark stores to over 700 by March 2025. The startup said its revenue has risen 140% from a year earlier, and its annualized gross merchandise value (GMV) is on track to exceed $1 billion. It works with more than 50,000 delivery partners and is adding over 5,000 delivery partners each month.

The company said about 75% of its dark stores were EBITDA positive as of last month. Improved efficiency and scale mean that a dark store that previously took 23 months to achieve profitability now reaches that milestone in six months, Zepto said.

The growth of quick commerce firms in India, a $4 trillion economy, has surprised many investors and analysts, especially because many similar business models collapsed in other markets.

“In India, there is a culture of buying hyper-locally. This doesn’t really exist in other parts of the world. Customers in India buy small-ticket items multiple times a week hyper-locally, and quick commerce gives them hyper-local, high-proximity and low-ticket use cases,” Zepto’s co-founder and chief executive, Aadit Palicha, told TechCrunch. “No other format in grocery, even in the offline world, has been able to make similar offerings to consumers.”

Quick commerce startups in India are beginning to increasingly expand beyond delivering groceries. One firm promises to deliver high-ticket items such as smartphones and gaming consoles to its customers in 10 minutes.

Palicha, who co-founded Zepto with Kaivalya Vohra when they both were just 19, said Zepto does offer electronics accessories like chargers and cables, but the firm isn’t looking to offer high-end electronics on its platform.

“We’re not really getting into smartphones, high-ticket fashion and laptops. We’re more interested in categories that are relatively lower-stake purchases, like household appliances, undergarments, general merchandise, toys, beauty and cosmetics, and home and kitchen products. We’re seeing resonance there,” said Palicha.

The startup currently operates in top Indian cities, and plans to expand to select smaller cities in the coming months. Palicha said Zepto is encouraged by the initial reception from cities like Jaipur, where the local offline offerings aren’t able to fully meet customer demands.

“If we are able to achieve this while continuing to delight customers, I believe we will be ready to go public relatively soon,” he said in a statement.

Avenir, a New York-headquartered venture firm, had been tracking Zepto for about three years before it finally invested in the current round. Zepto is able to break the traditional trade-offs of retail in India, said Ben Jubas, a partner at Avenir.

“It has an opportunity to become a massive commerce business due to the depth in its value proposition and operational rigor,” he told TechCrunch. “In our view, it’s second to none.”

Some industry analysts predict that quick commerce companies will significantly erode the market share of major e-commerce players like Amazon and Flipkart. Jubas said he subscribes to this thesis, but it’s up to Zepto’s management on how it intends to make a play with that.

According to Goldman Sachs, the total addressable market in the grocery and non-grocery categories for quick commerce companies in the top 40-50 cities is about $150 billion.

More TechCrunch

Fisker is just a few days into its Chapter 11 bankruptcy, and the fight over its assets is already charged, with one lawyer claiming the startup has been liquidating assets…

The fight over Fisker’s assets is already heating up

A hacker is advertising customer data allegedly stolen from the Australia-based live events and ticketing company TEG on a well-known hacking forum. On Thursday, a hacker put up for sale…

Hacker claims to have 30 million customer records from Australian ticket seller giant TEG

Welcome to Startups Weekly — Haje‘s weekly recap of everything you can’t miss from the world of startups. Sign up here to get it in your inbox every Friday. Elon…

Tesla makes Musk best-paid CEO of all time and Fisker bites the dust

Dot is a new AI companion and chatbot that thrives on getting to know your innermost thoughts and feelings.

Dot’s AI really, really wants to get to know you

The e-fuels startup is working on producing fuel for aviation and maritime shipping using carbon dioxide and other waste carbon streams.

E-fuels startup Aether Fuels is raising $34.3 million, per filing

Fisker was facing “potential financial distress” as early as last August, according to a new filing in its Chapter 11 bankruptcy proceeding, which the EV startup initiated earlier this week.…

Fisker faced financial distress as early as last August

Cruise, the self-driving subsidiary of General Motors, has agreed to pay a $112,500 fine for failing to provide full information about an accident involving one of its robotaxis last year.…

Cruise clears key hurdle to getting robotaxis back on roads in California

Feel Therapeutics has a pretty original deck, with some twists we rarely see; the company did a great job telling the overall story.

Pitch Deck Teardown: Feel Therapeutics’ $3.5M seed deck

The Rockset buy fits into OpenAI’s broader recent strategy of investing heavily in its enterprise sales and tech orgs.

OpenAI buys Rockset to bolster its enterprise AI

The U.S. government announced sanctions against 12 executives and senior leaders of the Russia-based cybersecurity giant Kaspersky. In a press release, the Department of the Treasury’s Office of Foreign Assets…

US government sanctions Kaspersky executives

Style DNA, an AI-powered fashion stylist app, creates a personalized style profile from a single selfie. The app is particularly useful for people interested in seasonal color analysis, a process…

Style DNA gets a generative AI chatbot that suggests outfit ideas based on your color type

Rates of depression, anxiety and suicidal thoughts are surging among U.S. teens. A recent report from the Center of Disease Control found that nearly one in three girls have seriously…

Khosla-backed Marble, built by former Headway founders, offers affordable group therapy for teens

Cover says what sets it apart is the underlying technology it employs, which has been exclusively licensed from NASA’s Jet Propulsion Laboratory.

A new startup from Figure’s founder is licensing NASA tech in a bid to curb school shootings

Spotify is introducing a new “Basic” streaming plan in the United States, the company announced on Friday. The new plan costs $10.99 per month and includes all of the benefits…

Spotify launches a new Basic streaming plan in the US

Photographers say the social media giant is applying a ‘Made with AI’ label to photos they took, causing confusion for users.

Meta is tagging real photos as ‘Made with AI,’ say photographers

Website building platform Squarespace is selling Tock, its restaurant reservation service, to American Express in a deal worth $400 million — the exact figure that Squarespace paid for the service…

Squarespace sells restaurant reservation system Tock to American Express for $400M

Featured Article

Change Healthcare confirms ransomware hackers stole medical records on a ‘substantial proportion’ of Americans

The February ransomware attack on UHG-owned Change Healthcare stands as one of the largest-ever known digital thefts of U.S. medical records.

20 hours ago
Change Healthcare confirms ransomware hackers stole medical records on a ‘substantial proportion’ of Americans

Google said today that it globally paused its experiment that aimed to allow new kinds of real-money games on the Play Store, citing the challenges that come with the lack…

Google pauses its experiment to expand real-money games on the Play Store

Venture firms raised $9.3 billion in Q1 according to PitchBook data, which means this year likely won’t match or surpass 2023’s $81.8 billion total. While emerging managers are feeling the…

Kevin Hartz’s A* raises its second oversubscribed fund in three years

Google is making reviews of all your movies, TV shows, books, albums and games visible under one profile page starting June 24, according to an email sent to users last…

Google is making your movie and TV reviews visible under a new profile page

Zepto, an Indian quick commerce startup, has more than doubled its valuation to $3.6 billion in a new funding round of $665 million.

Zepto, a 10-minute delivery app, raises $665M at $3.6B valuation
Image Credits: Zepto

Speak, the AI-powered language learning app, has raised new money from investors at double its previous valuation.

Language learning app Speak nets $20M, doubles valuation

SpaceX unveiled Starlink Mini, a more portable version of its satellite internet product that is small enough to fit inside a backpack.  Early Starlink customers were invited to purchase the…

SpaceX debuts portable Starlink Mini for $599

Ali Rathod-Papier has stepped down from her role as global head of compliance at corporate card expense management startup Brex to join venture firm Andreessen Horowitz (a16z) as a partner…

Brex’s compliance head has left the fintech startup to join Andreessen Horowitz as a partner

U.S. officials imposed the “first of its kind” ban arguing that Kaspersky threatens U.S. national security because of its links to Russia.

US bans sale of Kaspersky software citing security risk from Russia 

Apple has released Final Cut Pro for iPad 2 and Final Cut Camera, the company announced on Thursday. Both apps were previously announced during the company’s iPad event in May.…

Apple releases Final Cut Pro for iPad 2 and Final Cut Camera

Paris has quickly established itself as a major European center for AI startups, and now another big deal is in the works.

Poolside is raising $400M+ at a $2B valuation to build a supercharged coding co-pilot

The space industry is all abuzz about how SpaceX’s Starship, Blue Origin’s New Glenn, and other heavy-lift rockets will change just about everything. One likely consequence is that spacecraft will…

Gravitics prepares a testing gauntlet for a new generation of giant spacecraft

LTK (formerly LiketoKnow.it and RewardStyle), the influencer shopping app with 40 million monthly users, announced on Thursday the launch of a free direct message tool for creators to instantly share…

Influencer shopping app LTK gets an automatic direct message tool

YouTube appears to be taking a firm stance against Premium subscribers who attempt to use a VPN (virtual private network) to access cheaper subscription prices in other countries. This week,…

YouTube confirms crackdown on VPN users accessing cheaper Premium plans