Zepto, a two-teenage-founded instant grocery delivery startup, has raised $100 million in a funding round led by Y Combinator, bringing its valuation to $570 million just five months after launching in India’s burgeoning quick commerce market.
According to Aadit Palicha, co-founder and chief executive officer, the startup’s latest funding come 45 days after a previous capital raise of $60 million at a valuation of $225 million. In addition to Y Combinator’s Continuity Fund, Glade Brook Capital Partners, Nexus Venture Partners, Breyer Capital, and Silicon Valley investor Lachy Groom participated in the latest round.
Palicha and his childhood friend Kaivalya Vohra founded Zepto after dropping out of Stanford University’s prestigious computer science program to return to India and start a business in quick commerce.
The startup began in Mumbai earlier this year and has since expanded to Bangalore, Delhi, and four other cities, promising to deliver groceries and daily essentials in 10 minutes.
In India, a $1 trillion retail market where grocery purchases account for the majority of retail spending, online grocery delivery is gaining traction. Zepto is up against companies like Blinkit, which is backed by SoftBank Group Corp.,
Dunzo, which is backed by Google, and Swiggy, which is backed by Naspers Ltd., as well as Amazon.com Inc. and Walmart Inc.-backed Flipkart.
Palicha said in his statement that Zepto is developing quickly and that its core unit economics are strong. The ability to deliver items within 10 minutes is “game-changing”, according to co-founder and chief technology officer Vohra. The new funding will enable the Mumbai-based startup to expand its team and reach new cities.
The company operates 100 “dark stores,” or micro-warehouses, in high-demand areas, and employs technology to perform tasks such as determining store locations, product placement, and determining delivery routes to avoid traffic congestion.
It now ships over 2,500 items, including fresh produce, cooking essentials, snacks and beverages, personal care products, and household cleaning supplies.
According to Anu Hariharan, a partner at Y Combinator’s Continuity Fund, the founders bring “Doordash-like” execution to the quick commerce model. According to the statement, the startup is adding 100,000 new customers every single week.