Quick commerce major Zepto has raised $665 million, or about Rs 5,560 crore, as the Mumbai-based startup plans to double its dark store count ahead of a potential initial public offering. The company has raised the amount at a valuation of $3.6 billion.
The fresh funding comes just nine months after the company raised $235 million at a $1.4-billion valuation. Avenir, Lightspeed, and Avra joined Zepto's cap table as new investors, while existing investors Glade Brook, Nexus, and StepStone co-led the round, with Goodwater and Lachy Groom doubling down as well.
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"We plan to continue operating with fiscal discipline as we scale from 350 stores to 700 stores by reinvesting the capital generated from mature stores back into the business. If we are able to achieve this while continuing to delight customers, I believe we will be ready to go public relatively soon," Zepto Chief Executive Officer and Co-Founder Aadit Palicha said.
Zepto will mostly enter 10 new cities this year, with Ahmedabad, Jaipur and Chandigarh on the horizon. The company is also going to continue doubling down in its existing markets, where it has already proven high degrees of profitability, continuing to grow the business to over Rs 10,000 crore in sales, he said.
The company is on track to handle more than $1 billion of goods a year, based on May's performance. Roughly 75% of its 350 dark stores, or mini-warehouses, also made an operating profit in May. These stores now take only about six months to become profitable, as compared to 23 months earlier, Palicha said.
"Zepto may appear to be a mere 10-minute quick commerce company at first glance, but they are transforming Indian e-commerce by creating the 'Hyperlocal Amazon,' combining affordable prices with local convenience," Anu Hariharan of Avra said.
Zepto's plan to double dark stores comes only about a month after Blinkit said it will also double its store count to 1,000. With competition intensifying, Palicha said it all comes down to execution.
"That applies to pretty much every player in the market, regardless of capital or strategic backing. If only two players execute well, then only two players will build a large business. If only one player executes well, only one player will build a larger business. It's purely a function of execution," he said.
Zepto had earlier said that the company will go public in early 2025, however Palicha said this could spill into the next year.
His personal vision is take the company public when it's generating hundreds, if not thousands of crores of Ebitda and profit. "Obviously that's a tall ambition, and no internet company has ever been able to achieve that going into a listing, but I think, especially with this market, how quickly we've been able to show the growth, while keeping Ebitda close to breakeven, is important," Palicha said.
There's this ambition to build a truly excellent internet company, that can be benchmarked to the best globally, such as DoorDash and Airbnb, he said.
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