India’s Zepto raises $200m at $1.4bn valuation
Indian grocery delivery start-up Zepto has raised a USD 200m Series E round led by StepStone Group at a valuation of USD 1.4bn.
It marks StepStone’s first direct investment in an Indian company. The fund-of-funds, which has USD 143bn in assets under management and six Asia Pacific offices, added three investment professionals in the region earlier this year.
Goodwater Capital also participated, as did existing investors Nexus Venture Partners, Glade Brook Capital, and US angel investor Lachy Groom. It follows a USD 200m Series D in May last year led by Y combinator that valued the company at USD 900m.
Total funding since Zepto’s inception in 2021 comes to about USD 560m. Previous investors also include Contrary Capital Management, Kaiser Permanente Ventures, Breyer Capital, GFC Global Founders Capital, and 2 a.m. Ventures.
Zepto’s core value proposal and differentiator is speed; the start-up delivers food within 10 minutes via a network of more than 200 distribution points in 10 cities. The company claims most of these locations – called dark stores – are EBITDA positive and that they have delivered more than 6,000 “grocery products” to date.
Sales are up 300% in the past year, according to Avendus Capital, which advised Zepto on the latest transaction. On an annualized basis, sales are hoped to reach USD 1bn in the next few quarters. At the time of the Series D, annualised revenue was said to be in a range of USD 200m-USD 400m and on course to hit USD 1bn in the first half of 2023.
There are plans to achieve profitability and go public by 2025. To this end, Zepto engaged Ramesh Bafna as CFO last May. Bafna is an angel investor with several local organisations and previously served as CFO of local start-ups Zilingo, Myntra, and Coinswitch. He also previously served as a segment head of finance at Flipkart.
“Even with this capital, we want to maintain our discipline, avoid complacency, and push hard to hit EBITDA positivity, Kaivalya Vohra, co-founder and CTO of Zepto, said in a statement.
“In that journey, the biggest drivers of P&L improvement for us are based on technology and product. We are building one of the best supply chain product stacks in the country today and we are investing heavily in customer-facing product as well.”
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