The funding craze in start-ups has mounted a new high with 10-minute grocery distribution firm Zepto raising $60 million from US-based growth equity funds Glade Brook Capital, Nexus Venture Partners and Y Combinator.
One of Zepto’s earliest rounds, the investment round also observed participation from individual funders like Lachy Groom, Neeraj Arora and Manik Gupta, valuing the company at $225 million.
The organisation will use this money to increase operations across the nation and beef up its human capital. Zepto strives to have a 900-strong corporate team in a couple of months from 300 now. Established by two 19-year-old Stanford University dropouts – Aadit Palicha and Kaivalya Vohra – Zepto allows quick grocery delivery to customers through micro-warehouses.
Palicha said that an average delivery time on its platform is 8.47 minutes. He stated the business gets the entire process of assorting and packaging the goods once the order is placed in less than a minute.
“A lot of people assume that there is some magical innovation happening in the last mile. The last mile is actually very straightforward. The magic of this model is that we manage the entire process of packing and dispatching the grocery in under 60 seconds,” he shared.
The company, which was in a beta mode for the past six months over Delhi, Mumbai and Bangalore, is expanding fast and projects to reach out to key areas across Hyderabad, Chennai, Pune and Kolkata over the next 30 days.
“Q-Commerce (quick 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,” answered Palicha.
The online grocery market is supposed to grow to $24 billion by 2025, according to a new Redseer report.
Zepto will compete in the market with unicorns like Ola, which is working aggressively to access this domain ahead of its $2-billion IPO next year. It has set aside a fund of Rs 250 crore for the grocery delivery industry with a mandate to begin this section by mid-November.
Other companies that have started gaining market share in the domain include Swiggy, which runs Instamart and Grofers.
“They are disrupting e-commerce in India in a way we’ve never seen before, and we’re super impressed by their innovative mindset, technology-first thinking, and lightning-fast execution,” stated Suvir Sujan, Managing Director at Nexus Venture Partners.