Grocery Delivery App
Zepto, a Mumbai-based startup that operates a 10-minute instant grocery delivery service, has more than doubled its valuation to $570 million from $225 million less than two months ago as it expands into newer cities.
Y Combinator’s Continuity Fund led the $100 million Series C round in Zepto, the two said Monday. Glade Brook, Nexus, Breyer Capital, Lachy Groom, Global Founders Capital and Contrary Capital also participated in the round, which brings its to-date raise to $160 million.
The startup, founded by two 19-year-old entrepreneurs who left Stanford last year, came out of stealth mode in November. But long before it began talking about the business, Zepto had captured immense interest from the local startup community as people began voicing their opinion about the business.
Zepto, whose name playfully uses a mathematical term to describe the business, offers a 10-minute grocery delivery service, a category that has become red hot in several parts of the world in recent quarters. Heavily-backed players Swiggy and BlinkIt (formerly known as Grofers) have also entered the instant grocery delivery business.
Zepto’s arrival in the scene, too, was serendipitous. Aadit Palicha and Kaivalya Vohra had returned to India for a break shortly before the pandemic engulfed the nation.
The teenagers, who previously collaborated on a number of projects, including a ride-hailing commute app for school kids, suddenly found themselves locked in their houses in Mumbai. As the pandemic raged, the two struggled to get their grocery supplies even as grocery deliveries, categorized as essential by the local government, were still permitted in much of the nation.
“We are somewhat overly critical of ourselves and hold ourselves to very high standards. People are happy that they are getting their deliveries in 10 minutes or less, but can we continue to focus on scaling our SKUs and improving our unit economics?”Aadit Palicha
In an interview last week, Palicha said the startup is overwhelmed with the support and excitement it is seeing from the customers, but it doesn’t want to “become complacent.”
At stake is India’s e-grocery market that is estimated to be worth $25 billion by 2025, according to a note from Sanford C. Bernstein. “Online grocery penetration is expected to reach ~3-5%, by 2025 from less than 1% today. Long-term structural drivers remain strong: rising income and affluence, lower-tier consumption, e-commerce penetration (~30% CAGR), and a young population (~50% below 25). Grocery spend as a proportion of income remains high at ~ 30%,” its analysts wrote.
Grocery Delivery App