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19 Nov 2024
Zepto, a prominent player in quick commerce, has raised $665 million, approximately Rs 5,560 crore, as the Mumbai-based startup prepares to double its network of dark stores in anticipation of an upcoming initial public offering. The latest funding round values the company at $3.6 billion.
This infusion of capital follows closely on the heels of a $235 million raise just nine months ago, when Zepto was valued at $1.4 billion. Avenir, Lightspeed, and Avra have joined as new investors, while existing backers Glade Brook, Nexus, and StepStone co-led the round, with Goodwater and Lachy Groom also increasing their investments.
"Our strategy includes maintaining fiscal discipline as we expand from 350 to 700 stores by reinvesting profits from mature locations into our operations. If we can accomplish this while continuing to exceed customer expectations, we anticipate being ready for a public offering in the near future," explained Aadit Palicha, CEO and Co-Founder of Zepto.
Zepto plans to enter 10 new cities this year, including Ahmedabad, Jaipur, and Chandigarh, while intensifying efforts in current markets where it has demonstrated strong profitability, aiming to surpass Rs 10,000 crore in sales.
The company is on track to process more than $1 billion worth of goods annually, building on its May performance. Palicha highlighted that approximately 75% of Zepto's 350 dark stores, which function as mini-warehouses, achieved operational profitability in May. These stores now achieve profitability within six months, a significant improvement from 23 months previously.
"Zepto may initially appear as a quick commerce provider delivering within 10 minutes, but it is reshaping Indian e-commerce by creating a 'Hyperlocal Amazon,' offering competitive prices combined with local convenience," remarked Anu Hariharan from Avra.
Zepto's decision to double its dark store count follows Blinkit's recent announcement to expand to 1,000 stores, indicating heightened competition. Palicha emphasized that success hinges on effective execution, regardless of financial backing.
"While Zepto had initially targeted an early 2025 IPO, Palicha suggested this timeline might extend into the following year. His aspiration is to take the company public with substantial Ebitda and profits, a challenging but ambitious goal given the industry context," he added.
"We aspire to build an exceptional internet company that can rival global leaders like DoorDash and Airbnb," Palicha concluded.
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