Grocery Startup Zepto Founded By Teen Stanford Dropouts Valued At $900 Million

Published: May 5, 2022
Updated: May 5, 2022
Kaivalya Vohra Zepto
Grocery Startup Zepto

A $900 million grocery startup Zepto founded by Stanford dropouts

Within nine months of starting 10-minute deliveries in India’s fast-growing quick commerce segment, Zepto, an instant grocery startup founded by two teenagers, raised $200 million in a funding round led by Y Combinator, bringing its valuation to around $900 million.

Within nine months of starting 10-minute deliveries in India’s fast-growing quick commerce segment, Zepto, an instant grocery startup founded by two teenagers, raised $200 million in a funding round led by Y Combinator, bringing its valuation to around $900 million (Rs 68,953,546,800).

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Kaiser Permanente joined the round, which came less than five months after the startup had previously raised funds. Nexus Venture Partners, Glade Brook Capital, and Silicon Valley investor Lachy Groom have all increased their stakes in Zepto, according to a late Monday announcement. It now has $360 million in total funding.

Aadit Palicha and Kaivalya Vohra, childhood friends who dropped out of Stanford University’s computer science program to return to India and become e-commerce entrepreneurs, founded Zepto, named after the minuscule unit of time. Both of them are 19 years old.

Rivals such as Google-backed Dunzo, SoftBank Group Corp-backed Blinkit, and Naspers Ltd-backed Swiggy have been inspired by the Mumbai-based company’s 10-minute delivery promise. Along with established players Amazon.com Inc. and Walmart Inc.-backed Flipkart Online Services Pvt. Ltd., these are competing for shoppers’ attention in India’s $1 trillion retail markets.

According to the statement, Zepto’s revenue has increased by 800 percent quarter over quarter, and its cash burn has been reduced by five times on a per-order basis. The company’s team has grown to 1,000 people, and it has started making money in small micro-markets or dense city neighborhoods served by a warehouse or dark stores.

Amazon, Walmart’s (WMT.N) Flipkart, and Indian billionaire Mukesh Ambani’s Reliance are among the companies competing in India’s $600-billion grocery retailing industry.

Now, Blinkit, which is backed by SoftBank, and its competitor Zepto are racing to hire staff and open stores in order to gain a share of the market by offering the convenience of delivery in 10 minutes, rather than the hours or days that competitors take.

Their goal was to pack groceries in a few minutes at “dark stores,” or small warehouses in densely populated neighborhood buildings and send bike riders to nearby locations with about seven minutes to spare.

Grocery Startup Zepto

According to Ashwin Mehta, a lead IT sector analyst at India’s Ambit Capital, “it’s a threat to the larger players.” “Those companies that offer 24-hour deliveries will be forced to reduce their timelines if people get used to 10 minutes.”

According to RedSeer, India’s quick commerce sector, which was worth $300 million last year, will grow 10-15 times to $5 billion by 2025.

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Blinkit and Zepto, two 19-year-old Stanford dropouts, have piqued consumers’ interest by satisfying food and impulse shopping cravings, as well as urgent needs for daily supplies.

“This is very convenient; it has changed my lifestyle,” said Sharmistha Lahiri, who now uses Blinkit to fill in the gaps in her kitchen when things like tomatoes for soup or chocolate icing for a cake run out.

The 75-year-old, who lives in Gurugram, near New Delhi, was a frequent user of Amazon and Tata’s online grocer BigBasket, but he prefers Blinkit’s quick response in emergency situations.

Rapid deliveries are unbeatable in Europe and the United States, where companies like Getir in Turkey and Gorillas in Germany are rapidly expanding, but India’s accident-prone roads make quick commerce a dangerous business.

In a new service called ‘Zepto Cafe,’ Zepto is now piloting a service that will deliver coffee, Chai tea, and other cafe items within 10 minutes in select areas of Mumbai.

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