India grocery delivery player Zepto raises $60m
Zepto, an Indian grocery app that claims to deliver food in 10 minutes, has raised $60 million in its first institutional funding round with US-based Glade Brook Capital taking the lead.
Nexus Venture Partners, Y Combinator, and Global Founders Capital also participated alongside individuals associated with the likes of WhatsApp and Microsoft. It values the company at $225 million.
Zepto was launched in April by Stanford University dropouts Aadit Palicha and Kaivalya Vohra, who assembled a team including former executives from Uber, Flipkart, Dream11, Pepperfry, and Pharmeasy. The company claims to deliver more than 2,500 products within 10 minutes by leveraging a network of about 40 dark stores.
Competitors include the likes of BigBasket, which was acquired earlier this year by Tata Group at a $2 billion valuation, and SoftBank-backed Grofers, which has raised more than $550 million. They are said to have 37% and 13% market shares, respectively.
Meanwhile, in the meal delivery space, Swiggy has raised a $1.2 billion round earlier this year and Zomato completed a domestic IPO. Both offer 10-minute delivery in certain cities.
Zepto has nevertheless identified “gross execution errors” in this service area, noting that consumers have been frustrated by delivery timeframes as long as three days. This is said to have driven 200% growth every month since the company’s inception.
“Simply put, customers love a rapid delivery experience. The data speaks for itself – once we started delivering in 10 minutes, our NPS [net promoter score] shot up and has constantly remained at around 85 with a 50%-plus week-on-week user retention rate, which shows the incredibly strong customer love for our product,” Vohra told VCCircle.
The company, which is currently active in Mumbai, Bangalore, and Delhi, will reportedly use the fresh capital to expand into new cities and hire additional staff. There are also plans to grow the dark store footprint to more than 100 within the year.
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