Zepto Becomes First Indian Unicorn Of 2023, Raises $200 Million At $1.4 Billion Valuation

Online grocery company Zepto on Friday announced that it has successfully secured a funding round amounting to $200 million (equivalent to nearly Rs 1,653 crore), becoming a first unicorn this year, with a valuation of $1.4 billion, reported Moneycontrol. The Series E funding round was spearheaded by US-based StepStone Group and included Goodwater Capital. Some existing investors like Nexus Venture Partners, Glade Brook Capital, and Latchy Groom are also part of this funding series, according to the report.

On Friday, Zepto also said that the company aims to become EBIDTA-positive in 12-15 months and go for public listing by 2025. As per the report, the company’s EBITDA margin has been narrowing to a negative 15-16 per cent in April from a negative 278.6 percent in January 2022. “This business is about execution and we are succeeding because our execution is strong. Our culture of deep frugality and worshipping customers has gotten us here, but there is still so much for us to achieve,” said 23-year-old Zepto Co-founder and CEO Aadit Palicha. 

Aiming for a public listing by 2025, the Mumbai-based rapid commerce firm, as per its founders Aadit Palicha and Kaivalya Vohra, is steadfast in its intention, the report said. 

Another co-founder and Chief Technology Officer (CTO), Kaivalya Vohra, said that Zepto is on track to attain annualised sales of $1 billion within the upcoming quarters. Vohra said the company’s focus is on enhancing its supply chain product infrastructure, which is rapidly becoming one of the most robust in the nation. Additionally, substantial investments are being directed toward refining the customer-oriented product offerings, according to Vohra.

Founded in 2021 by Aadit Palicha and Kaivalya Vohra, Stanford University dropouts, Zepto has swiftly emerged as India’s most rapidly expanding e-grocery firm, with competitors such as Blinkit, Swiggy Instamart, and Reliance-backed Dunzo. After a Series-D funding round that secured $200 million from global investors like Y Combinator Continuity, Kaiser Permanente, Nexus Venture Partners, Glade Brook Capital, and Lachy Groom, the company’s valuation has soared to $900 million in May last year. 

This funding holds significance, as Zepto becomes India’s first unicorn in 2023, a start-up valued at more than $1 billion. The last company to attain unicorn status was Molbio Diagnostics in September 2022. In the initial seven months of 2023, funding for Indian startups reportedly saw a 77 per cent decline in comparison to the corresponding period in the last year. Throughout the year’s commencement, a limited number of startups have successfully concluded significant funding endeavors.

During the peak of the funding surge in 2021, India was witnessing nearly a new unicorn emerging every week. The year saw a total of 44 start-ups joining the unicorn ranks, followed by an additional 23 in the subsequent year, said the report. Subsequently, investor caution resulted in a more selective approach to backing startups, as they opted for a prudent strategy.

As per the report, out of the raised $200 million, a substantial portion of $105 million originated from newcomers StepStone Group ($75 million) and Goodwater Capital ($30 million), both venturing into direct investment with the Mumbai-based company. Goodwater Capital, having previously invested in audio-streaming startup Pocket FM and edtech companies Teachmint and Yellowclass, has broadened its portfolio. The remaining $95 million stemmed from existing investors, including Nexus Venture Partners, Glade Brook Capital, and Lachy Groom.