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24 May, 2022
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Zepto Raises Funds At $900 Million With The 10-Minute Grocery Delivery Model

Indian grocery start-up Zepto raises funds close to $200 million in new funding taking the company’s evaluation close to about $ 900 million. The staggering growth rate of the start-up indicates growing investor interest in a sector where companies attract customers with faster 10-minute deliveries. Zepto was launched last year by two 19-year-old Stanford dropouts. Its latest round of funding was led by existing investor Y Combinator, a popular Silicon Valley fund.

It also saw the contribution from a new investor, US-based health giant Kaiser Permanente. All the other major Zepto investors includes Nexus Venture Partners, the company said in a statement Tuesday.

Zepto’s major competitor is the SoftBank-backed Blinkit in India, which also works on the 10-minute grocery delivery model. Other competitors, including Dunzo, backed by Indian millionaire Mukesh Ambani’s Reliance, and Swiggy, backed by SoftBank, all betting on a quick grocery delivery policy in the so-called fast-paced commercial sector. 

Aadit Palicha, founder and CEO of Zepto, said that the company provides services in 11 cities and plans to use the new funds to expand to 24 new cities during the next quarter. 

“The scale that took food delivery companies years to achieve has taken us months (with groceries). That’s the benchmark most people use, and the market size for groceries is far bigger,” Palicha said in an interview.

The country’s start-up companies are attracting tremendous interest from foreign investors who are determined to make money through the growing use of digital payments, the internet and smartphones in the South Asian market. A research firm says India’s fast-growing business sector, valued at $ 300 million last year, will grow 10-15 times to $ 5 billion by 2025. India’s wholesale retail industry is vast and is estimated at $ 600 billion.

As business boomed, India’s rapid delivery services have raised concerns about road safety for cyclists as India has one of the most common road hazards in the world. Blinkit and Zepto drivers have previously said that they are under pressure to meet the delivery deadlines, which often leads to speeding for fear of reprimanding shopkeepers.

Palicha defended Zepto’s practices, saying drivers travel only short distances of 1.8 km to deliver orders and they don’t rush.

“Quick commerce is about short distances, not going fast,” Palicha said.

Sources familiar with the matter told that Zepto currently records a monthly revenue of $12 million but spends about $8 million on advertising, promotions and other services such as free delivery each month.

Palicha said: “we burn less (cash) than our rivals,”

“Zepto business model is proven globally. In Turkey and Russia, companies have shown operating profits,” he added. 

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