Fast food startup Zepto has raised $200 million in a new funding round as it looks to expand its operations. 10 minute delivery service to other cities in India and expand the network of dark shops.
Existing sponsor Y Combinator Continuity led Zepto’s Series D round, valuing the Mumbai-headquartered startup at around $900 million, up from $570 million in its December Series C round and $225 million in a round announced at the end of October.
Kaiser Permanente, the healthcare giant that also runs a venture arm, as well as all key existing investors including Nexus Venture Partners, Glade Brook Capital and Lachy Groom, have entered the new round, the startup said Monday night.
There is no secondary deal in the new round, bringing the startup’s current raising level to $360 million.
At the age of 19, Aadit Palicha and Kaivalya Vohra co-founded Zepto. The duo, who previously worked on a number of projects including a commute app for schoolchildren and quit Stanford two years ago, came out of stealth mode with Zepto last November.
Its 10-minute delivery service now operates in 11 cities in India and processes hundreds of thousands of orders every day, Palicha, who is Zepto’s chief executive, told TechCrunch in an interview.
The startup’s current annual revenue is between $200 million and $400 million, he said, and he aims to increase that figure to “at least $1 billion” by the quarter ending next March.
According to him, the increase in revenue is due to the fact that in recent months the startup has constantly grown by more than 50% every month. According to him, in the latest quarter, the startup’s revenue increased by 800%, while ordering costs decreased by more than five times.
Zepto is among the startups that have kick-started the fast-commerce category in India. Today it competes with Swiggy, India’s most valuable food delivery startup, which has pledged to invest more than $700 million in its quick commerce service called Instamart.
A number of other players, including Blinkit, formerly known as Grofers, are also trying to win back some of the market. The startup recently agreed to an acquisition offer from larger food delivery company Zomato, as previously reported by TechCrunch, which has expressed interest in expanding into the fast commerce category in recent months, an area in which it has historically performed poorly.
Last month, Zomato launched a pilot 10-minute food delivery service in its hometown of Gurugram. Zepto is also testing a 10-minute delivery service for a range of prepared meals, including hot drinks and snacks, to selected areas in Mumbai.
According to analysts at Sanford C. Bernstein, a $45 billion market is at stake. In a report released earlier this year, the firm’s analysts said India leads other global markets in the adoption of fast trading.
Analysts say the growing willingness and ability of customers to pay more for premium products, as well as a growing home delivery market, have fueled the growth of rapid trade in India.
According to them, the average order size placed on the instant delivery service is currently around $6 in India, compared to $12-15 for traditional online grocery orders. “But recent cohorts have shown an improvement in stickiness, with basket size increasing with increased use. In fast commerce models, the frequency of monthly orders has increased (mature cohorts 3-4 times a week, with a healthy average cost of INR 400-500). Fast commerce players are focused on creating a high-frequency basket that will improve the economy,” they added.
For Zepto, instant food delivery is just the beginning of a ten-year journey, he says. While he declined to reveal the startup’s bold plans for the future, he said it’s fair to assume Zepto will expand into categories beyond groceries in the long run. , especially those currently underserved by the giant ecommerce players.
The startup plans to expand to another 12 to 20 cities over the next 12 months and open several hundred more dark stores, which it uses to store inventory.
These dark stores are optimized for fast delivery, Palici said. There, the startup stores the most frequently ordered products and a catalog of articles in different price ranges.
Credit: techcrunch.com /