Debangana Ghosh

Ten-minute grocery delivery app Zepto on Monday announced that it has raised $100 million at a valuation of $570 million in a Series C round. The round was led by Y Combinator’s Continuity Fund with participation from new and existing investors, including Glade Brook, Nexus, Breyer Capital, Lachy Groom, Global Founders Capital, and Contrary Capital among others.

The five-month-old start-up doubled its valuation to over half a billion in 45 days. It had last raised a round of $60 million in November.

With this fresh capital, Zepto plans to expand coverage across multiple cities and scale its team rapidly and is currently hiring across all functions, including operations, supply chain, marketing, finance, product, engineering and human resources. Over the past two months, Zepto has expanded beyond Mumbai by launching in Bengaluru, Delhi, Gurgaon, Chennai, Hyderabad and Pune, with Kolkata soon to follow.

Shorter distance, cheaper rates

Aadit Palicha, Co-founder and CEO, Zepto told BusinessLine , “We have been able to raise capital quickly because of the unit economics of this model. In a nutshell, the faster you do the deliveries, the cheaper it gets. This is because, by doing it faster, the amount deliveries per rider goes up 2-3X as compared to food delivery. Last-mile delivery costs for us also gets reduced due to this. The fuel costs too are comparatively low as the deliveries are happening within localities. Our mature stores have started inching towards operating profitability in just five months of launch.”

He added that the caveat here is that “you need intense execution and control on supply chain and business fundamentals.” The start-up currently operates 100 dark stores across key markets and is seeing a 65 per cent month-on-month customer retention rate. Zepto has an 88-point net promoter score (NPS).

“We have started charging delivery fees in our mature micro-markets. We are going to scale that eventually. We are charging around ₹15-20 per order, which we need roughly to break even on operating levels. We have 100 dark stores across major cities, and each store will have a maximum capacity of 2,500 orders per day,” Palicha said.

Anu Hariharan of Y Combinator said, “We are excited to double down and lead this round in Zepto (YC W21). Since Aadit and Kaivalya went through Y Combinator, we have observed that they’re exceptional founders who bring relentless focus and ‘Doordash-like’ execution to the quick commerce model. They originally launched with a different model, swiftly pivoted to quick commerce in August 2021 and are now adding 1,00,000 new customers every week, 60 per cent of them women.”

She added, “Their attention to detail on the logistics experience is unparalleled and this has enabled them to scale to most major metros in just five months. Simply put, we’re confident Zepto will win in this space over the long-term.”