Zepto, a 10-min grocery delivery firm, raises $60 million in early institutional round

The funding frenzy in start-ups has scaled a new high with 10-minute grocery delivery firm Zepto raising $60 million from US-based growth equity funds Glade Brook Capital, Nexus Venture Partners and Y Combinator.

The funding round - one of Zepto’s earliest rounds – also saw participation from individual investors like Lachy Groom, Neeraj Arora and Manik Gupta, valuing the company at $225 million.

The company will use this money to expand operations across the country and beef up its human capital. Zepto aims to have a 900-strong corporate team in a couple of months from 300 now.

Founded by two 19-year-old Stanford University dropouts – Aadit Palicha and Kaivalya Vohra – Zepto offers quick grocery delivery to customers through micro-warehouses.

In an interaction with Moneycontrol,  Palicha said that an average delivery time on its platform is 8.47 minutes. He said the company gets the entire process of assorting and packaging the products once the order is placed in less than a minute’s time.

“A lot of people assume that there is some magical innovation happening in the last mile. The last mile is actually very straight forward. The magic of this model is that we manage the entire process of packing and dispatching the grocery in under 60 seconds,” he said.

The company, which was in a beta mode for the last six months across Delhi, Mumbai and Bangalore, is expanding fast and plans to reach out key areas across Hyderabad, Chennai, Pune and Kolkata over the next 30 days.

“Q-Commerce (quick commerce) in India is an opportunity of epic proportions and strong unit economics. We’ve been ignoring the noise and executing heads-down for a long time to perfect this model, and our efforts are paying off,” said Palicha.

The online grocery market is expected to grow to $24 billion by 2025, according to a recent Redseer report.

Zepto will compete in the market with unicorns like Ola which is working aggressively to enter this domain ahead of its $2-billion IPO next year. It has set aside a budget of Rs 250 crore for the grocery delivery business with a mandate to start this division by mid-November, Moneycontrol reported on October 29. 

Other companies that have started gaining market share in the domain include Swiggy, which runs Instamart and Grofers.

“They are disrupting e-commerce in India in a way we’ve never seen before and we’re super impressed by their innovative mindset, technology-first thinking, and lightning-fast execution,” said Suvir Sujan, Managing Director at Nexus Venture Partners.