Welcome to another It’s-a-big-deal blog powered by PrivateCircle Research. In this episode we delve into the top private market deals from India between 21 August – 24 September, 2023.
Watch this Episode 9 available on Linkedin and YouTube.
India’s Latest Unicorn
In the fast-paced world of technology and startups, one name has been making headlines recently – Zepto. This episode of It’s-a-big-deal brings you an exclusive look at Zepto’s journey to becoming India’s latest unicorn.
Join us as we explore the funding, financial performance, and future prospects of this remarkable quick commerce platform.
The $200 Million Round
The most significant deal in the past month was undoubtedly Zepto’s Series E funding round, which raised a staggering $200 million. This infusion of capital not only propelled Zepto’s valuation to over a billion dollars but also earned them the coveted title of India’s first unicorn of 2023.
Led by StepStone Group and Goodwater Capital, this funding round marks a remarkable achievement for Zepto, especially in a time when many companies are facing challenges like down rounds or stagnant valuations.
Origins & Operations
To understand Zepto better, let’s delve into its background. Founded in 2021 by Aadit Palicha and Kaivalya Vohra, Zepto is a quick commerce platform specializing in 10-minute grocery deliveries.
Currently operational in 7 to 10 cities, Zepto offers a selection of 6,000 products, including groceries, fruits, and vegetables. Compared to its competitors, Zepto maintains a concentrated operational presence, with others scaling to 25-27 cities.
Financials
In FY 2022, the company reported a total revenue of ₹142.3 cr, a remarkable leap from its humble ₹1 lakh revenue in FY21. This exponential growth within just a year of inception showcases Zepto’s potential in the quick commerce sector.
However, it’s essential to note that Zepto recorded a loss of ₹390 crores in FY22, more than double its total revenue. The question arises: where is this capital going? A closer look reveals that Zepto allocated ₹175.5 cr to marketing and approximately ₹50.3 cr to employee wages and benefits.
The marketing expenses accounted for 124% of Zepto’s operational revenue in FY22. Comparing Zepto to its competitors, Dunzo followed closely by allocating 118% of its operational revenue to marketing during the same period. In contrast, Blinkit dedicating about 50% of its operational revenue to marketing.
Fundraising
Quick commerce is an industry that demands substantial capital investments, and Zepto is no stranger to this. The ability to capture market share often requires substantial marketing efforts and Zepto has been successful in this regard.
In just two years, Zepto raised over half a billion dollars, showcasing its ability to secure substantial funding rounds.
Loans & Workforce
Beyond its equity funding, Zepto’s financial strategy includes loans. A total of five entries under the loan section amount to approximately ₹274 crores. Notably, three of these loans were acquired in 2022, with the largest loan of ₹121 crores issued in May 2023, a time when many companies struggled to secure funding.
Despite the challenging funding environment, Zepto’s workforce steadily grew, reaching 1,390 employees in July 2023. This demonstrates Zepto’s commitment to its growth trajectory and ability to attract fresh talent even during a funding downturn.
Road Ahead
As Zepto continues to secure substantial funding and expand its operations, the true test of its success lies in its ability to translate these investments into long-term revenue growth and profitability. The quick commerce sector is highly competitive and dynamic, making sustained success a challenging but rewarding endeavor.
Conclusion
Zepto’s journey from a startup founded in 2021 to India’s latest unicorn is a testament to the potential and resilience of the quick commerce industry. As it embarks on its path to growth and profitability, all eyes are on Zepto to see how it will navigate the ever-changing landscape of the Indian market.
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Disclaimer: The content provided in this article is for educational and informational purposes only and does not constitute professional financial advice. The opinions expressed herein are those of the author and do not necessarily reflect the views of the company / organization. Please consult a qualified financial professional prior to making any financial decisions.
Read more blogs of It’s-a-big-deal series:
Epsiode 1 | 27 Feb – 05 Mar 2023
Episode 3 | 13 Mar -15 Apr 2023
Episode 4 | 16 Apr – 02 May 2023
Episode 6 | 25 May – 17 June 2023
Episode 7 | 18 Jun – 14 Jul 2023
Episode 8 | 15 Jul – 20 Aug, 2023