Indian grocery startup Zepto said on Friday it has raised $200 million (nearly Rs 16.50 crore) in new funding at a valuation of $1.4 billion (nearly Rs 1,156 crore), becoming the country’s first start-up to break the $1 billion valuation mark. The company’s valuation hit a new high in nearly a year.

Zepto said it raised capital from U.S. investment firms StepStone Group and Goodwater Capital “during the worst downturn in capital markets in more than a decade.” Existing backers Nexus Venture Partners, Glade Brook Capital and Lachy Groom also participated in the deal.

Zepto, which promises grocery delivery in 10 minutes, was founded in 2021 by two 19-year-old Stanford dropouts to compete with SoftBank-funded Swiggy and Blinkit, which are betting on fast delivery in the so-called fast commerce space service. Even among them, Zepto CEO Aadit Palicha said the company had the fastest average delivery time at 13 minutes.

Zepto rival Swiggy plans to list on the Indian stock market next year, according to Reuters.

Zepto plans to use the funds to further its presence in the seven Indian metropolises it currently operates in, including Delhi, Mumbai and Bengaluru, where the company generates monthly revenues of $50 million (nearly Rs. rupee). 4.95 billion rupees), Palichar told Reuters.

“Operating in a bear market has forced us to be more disciplined. There is no growth or profit (problem), there has to be both.” He said the company was also planning an initial public offering in 2025, without revealing more detail.

While Zepto remains loss-making, most of its so-called dark stores (dense warehouses) generate cash, the company said, aiming to be profitable within 12 to 15 months.

After a year, the company will consider expanding to new cities, Palichar said.

Zepto last raised funding in May 2022, when it was valued at $900 million (nearly Rs 7,430 crore). Its sales have tripled year-on-year and will reach $1 billion (nearly Rs 8,260 crore) in annual sales in the next few quarters, the company statement said.

Investment bank Avendus advised Zepto on this round of financing.

© Thomson Reuters 2023

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