In a remarkable feat, Zepto, a quick-commerce startup, has broken India’s unicorn drought by securing $200 million in a Series E funding round, propelling its valuation to an impressive $1.4 billion. This makes it the first unicorn to emerge in India this year. Let’s delve into the details of this exciting development.
Zepto’s Funding Journey
Founded in 2020 during the pandemic and officially launching its operations in 2021, Zepto has quickly gained prominence in the Indian startup ecosystem. The company specializes in quick-commerce, offering rapid delivery of essential goods to consumers’ doorsteps.
Zepto’s journey to unicorn status has been nothing short of remarkable. In just two years, the company has raised a staggering $560 million in funding. The recent Series E funding round, led by the StepStone Group, a US-based asset management firm, played a pivotal role in boosting its valuation. Goodwater Capital and some existing investors also participated in this funding round.
Significance of the Funding
The significance of Zepto’s funding cannot be overstated. It marks the end of an 11-month unicorn drought in India, where the creation of startups valued at over $1 billion had slowed significantly. The last Indian startup to achieve unicorn status prior to Zepto was Molbio Diagnostics in September 2022.
Competing in a Crowded Space
Zepto faces fierce competition from industry giants like Blinkit (owned by Zomato), Swiggy Instamart, Dunzo (funded by Reliance), and Tata’s BigBasket (BB Now). Despite this competition, Zepto has held its own and is the third-largest player in terms of order volumes, according to information shared with investors.
One of the key highlights of Zepto’s journey is its improving financials. The company reported a significant reduction in its monthly cash burn, dropping from Rs 90 crore in September 2022 to Rs 55 crore in April. Although specific financial figures were not disclosed, Zepto is on track to achieve EBITDA positivity within the next 12 months.
Path to an IPO
Zepto’s ambitious plans include turning EBITDA-positive and eyeing an initial public offering (IPO) during the first half of 2025. The recent funding round, which raised $200 million, was primarily intended to strengthen the company’s balance sheet in preparation for its IPO journey.
In conclusion, Zepto’s journey from its inception during the pandemic to becoming India’s first unicorn of 2023 is a testament to its resilience, innovation, and the trust it has gained from investors. As the company continues to grow and refine its business model, it sets a positive example for the Indian startup ecosystem, showing that even during challenging times, unicorns can still emerge and thrive.
