Two 19-year-old entrepreneurs, who have previously collaborated on a number of projects including a ride-hailing commute app for school kids and last year left Stanford to pursue a new startup, said on Sunday they have raised $60 million to disrupt India’s overcrowded and highly-competitive grocery delivery market.
Glade Brook Capital led the six-month-old app Zepto’s first institutional financing round, the startup’s founder and chief executive Aadit Palicha told TechCrunch in an interview. Nexus and Y Combinator as well as angel investors Lachy Groom, Neeraj Arora, and Manik Gupta participated in the round — which according to two people familiar with the matter values Zepto between $200 million and $300 million.
Zepto, which has largely operated in stealth mode until today, has been the talk of the town for the past four months. The startup, whose name playfully uses a mathematical term to describe the business, offers a 10-minute grocery delivery service, beating many of its heavily-backed rivals on speed.
To achieve this feat, Zepto has set up dark stores across the cities where it operates (Mumbai, Bangalore, and as of this week, Delhi.) Palicha said these dark stores, which the startup has set up and owns, are designed and optimized for fast deliveries. (Zepto’s approach, for which Palicha said he looked at other markets and spoke with the operators running those firms, is different from many Indian startups that rely on regular grocery stores for inventory.)
“The way we are growing right now, and the current penetration and frequency of usage we are seeing, the opportunity is just massive,” he said. The startup plans to soon expand to Hyderabad, Pune, and Kolkata and grow the number of dark stores it has to over 100 by early next year, he said.
The idea to create Zepto came, said Palicha, when he and Kaivalya Vohra (the other founder) were locked in their houses in Mumbai last year because of the pandemic. “We just had been exposed to the entrepreneurial and tech startup world in a very deep way. Now we were in Mumbai and the biggest problem for the two of us bachelors was securing grocery and essentials,” he said.
Maharashtra — like every other Indian state — had enforced lockdown to contain the spread of the virus, which among other things, meant that deliveries were taking two to three days to reach their customers. “We were extremely frustrated,” he said.
“We felt that the online play of the Indian grocery delivery space, which is one of the world’s largest, was grappling with some gross execution errors,” he added, without naming any firm.
Zepto competes with a number of heavily-backed startups including SoftBank-backed Swiggy and Grofers and Google-backed Dunzo, many of which have expanded to the fast grocery delivery category in recent quarters.
“We’ve been ignoring the noise and executing heads- down for a long time to perfect this model, and our efforts are paying off. Today, we’re consistently growing 200% every single month with an unstoppable team, robust product infrastructure, and deep access to institutional capital,” said Palicha.
This is a developing story. More to follow…
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