Zepto 'in talks' to raise funding, may become India's 1st unicorn this year

Quick-delivery firm said to be looking to raise $150 mn in a funding round that will value it at $1.3 bn

India may get its first unicorn this year as Zepto, which promises 10-minute deliveries, is in talks to get fresh funding that would take the start-up’s valuation past $1 billion.

The quick-delivery firm is looking to raise $150 million in a series E round, which will take its valuation to $1.3 billion. The round will be led by StepStone Group, a limited partner (LP) of Zepto’s existing investor, Nexus Venture Partners, said media reports.

Sources associated with the Mumbai-based company told 'Business Standard' that the fundraising talks were in their initial stages.

Zepto did not immediately respond to Business Standard’s requests for comment.

Aadit Palicha, Zepto’s chief executive officer, who sources said is in the US, told 'Business Standard' last December last year that the company had no funding requirements at the time but would look to raise money sometime in August or September this year. He did not comment on the amount he sought to raise.

Zepto competes with Swiggy Instamart and Blinkit, which is backed by Zomato. Dunzo, which is backed by Reliance and Google, makes quick deliveries too but is facing a cash crunch.

Aside from Nexus, Zepto counts the likes of Y Combinator, Glade Brook Capital and Kaizer Permanente amongst its backers.

A unicorn is a company with a valuation of more than $1 billion. India’s unicorn count sprinted in 2021, when start-ups got a record-breaking influx of capital, but has lost steam of late.

The year 2021 saw the creation of 44 unicorns, while the following year saw 25 start-ups acquiring unicorn status, according to Tracxn, a market intelligence platform. As funding slowed during the latter part of last year, so did the unicorns. As many as 19 unicorns were minted during the first half of 2022, compared to the second half’s six.

The quick-commerce model boomed in 2021 after lockdowns to contain Covid-19 propelled demand for grocery delivery. Zepto, which was founded in 2021 by Palicha and Kaivalya Vohra, was among the few companies who rode this wave with its promise of 10-minute deliveries.

As a result, the firm, which is currently valued at $900 million, had raised $60 million in October 2021. In December that same year, Zepto raised another $100 million. May 2022 saw Zepto raise its latest funding round of $200 million.  

Zepto reported a standalone loss of Rs 390.3 crore in FY22, while its revenue stood at Rs 142.3 crore, according to Ministry of Corporate Affairs filings. Its total expenses for the period touched Rs 532.7 crore.