Home Correction app Zepto, a 10-minute grocery delivery app, raises $200M at a $900M valuation

Zepto, a 10-minute grocery delivery app, raises $200M at a $900M valuation

0

Instant grocery startup Zepto has raised $200 million in a new funding round as it seeks to expand its 10 minute delivery service to more cities in India and expand its network of dark shops.

Existing backer Y Combinator Continuity led Zepto’s Series D round, valuing the Mumbai-based startup at around $900m, up from $570m in its December Series C round and $225m in a turn unveiled at the end of October.

Kaiser Permanente, the giant healthcare company, which also operates a venture capital arm, along with all existing major investors including Nexus Venture Partners, Glade Brook Capital, Contrary Capital and Lachy Groom, participated in the new round, said announced the startup on Monday evening.

There are no side deals in the new round, bringing the startup’s raise to date to $360 million.

At 19, Aadit Palicha and Kaivalya Vohra co-founded Zepto. The duo, who had previously worked on a number of projects, including a school shuttle app, and dropped out of Stanford two years ago, took Zepto out of stealth mode in November last year.

Its 10-minute delivery service is now operational in 11 cities across India and it handles hundreds of thousands of orders every day, Palicha, who is Zepto’s chief executive, told TechCrunch in an interview.

The startup’s current annualized revenue is between $200 million and $400 million, he said, a figure he is determined to reach “at least $1 billion” by the quarter ending in March. next year.

The revenue surge comes as the startup has consistently grown more than 50% every month for the past few months, he said. In the last quarter, the startup increased revenue by 800% while reducing spend per order by more than five times, he said.

At 19, Kaivalya Vohra and Aadit Palicha co-founded Zepto. Picture credits: Zepto

In India, Zepto is one of the first startups trying to prove the fast commerce model, a category that has taken off in several markets including North America and Europe. However, a number of startups operating in the space have either scaled back their efforts or close completelyas many venture capitalists lose their appetite for quick delivery.

Zepto competes with Swiggy, the Indian most valuable food delivery startup and the one who is committed to investing more than $700 million on its fast trading servicecalled Instagram.

A number of other players, including Blinkit, formerly known as Grofers, are also trying to capture a share of the market. The SoftBank-backed startup recently accepted an acquisition offer by larger food delivery company ZomatoTechCrunch reported earlier, which in recent months has expressed interest in expanding into the fast trading category, an area where it has historically performed poorly.

Zomato last month launched a 10-minute food delivery pilot project in his hometown of Gurugram. Zepto is also piloting a service to provide a range of prepared food items including hot drinks and snacks as part of its signature 10-minute pledge in selected areas of Mumbai, he said.

At stake is a $45 billion market, according to analysts at Sanford C. Bernstein. In a report released earlier this year, company analysts said India leads other global markets in adopting rapid trade.

Analysts said the growing willingness and ability of customers to pay more for higher quality products and the growing market for door-to-door delivery have contributed to the rapid growth of trade in the country.

An overview of the fast trade market in India, China and Europe. (Data and image: Bernstein)

The average size of an order placed on an instant delivery service is currently around $6 in India, compared to $12 to $15 for traditional online grocery orders, they said. “But recent cohorts have shown improved stickiness, with basket size increasing with increasing usage. Fast trade models have seen an improvement in monthly order frequency (mature cohorts at 3-4 once a week, with a healthy AOV of 400-500 Indian Rupees). Fast trade players are focused on driving a high frequency basket which will result in better savings,” they added.

For Zepto, instant grocery delivery is just the start of a decade-long journey, Palicha said. While he declined to reveal the startup’s bold plans for the future, he said it was fair to assume that Zepto would expand into categories other than grocery in the long term, especially those that are currently underserved by e-commerce giants.

The startup plans to expand to 12-20 more cities over the next 12 months and create a few hundred more dark stores, which it uses to stock its inventory. These dark stores are optimized for fast delivery, Palicha said. There, the startup stocks the most commonly ordered items and a catalog of SKUs in different price ranges. The startup also plans to nearly double its workforce to 2,000 by the end of this year.