10-minute grocery delivery start-up Zepto raises $100 million, to hire 800 people in FY23

Zepto, a five months old start-up, has raised $100 million in a Series C round led by Y Combinator's Continuity Fund at a valuation of $570 million, a 2X jump from its valuation nearly 45 days ago when it had bagged $60 million. The round also saw participation from new and existing investors, including Glade Brook, Nexus, Breyer Capital, Lachy Groom, Global Founders Capital, Contrary Capital, among others.

Zepto's co-founder and CEO Aadit Palicha told BusinessToday.In in an exclusive interaction that the start-up is planning to hire 800 people for its dark stores, supply chain, marketing, finances and operations in FY22-23. "We have grown aggressively and are now present across major Indian metros. The current funds infusion will further help us expand to towns and cities beyond metros. We have a strong 400 member team now and are hiring 800 more in 2022-23 across various verticals," the 19-year-old co-founder said.

He added that in the highly competitive quick-commerce industry in India, Zepto's execution model is unique which has spiked investor's interest in the company. "We are looking at our execution in the long-term in a more sustainable manner. Currently we have 100 dark stores strategically located which can handle large volumes as compared to most of our rivals. This is reflected in our customer retention rates over the past five months since our inception. We are growing 200 per cent month-on-month and the time we took to scale is a fraction of the time which was taken by food delivery majors like Zomato, Swiggy," Palicha added.

The company's leadership includes senior executives and operators from Flipkart, Uber, Dream11, Pharmeasy, PepperFry, and Amazon, as per an official statement.

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Palicha also allayed concerns about the hyper-competitive quick-commerce delivery model creating a huge pressure on gig workers. "In fact, our rider workforce retention rate is 60 per cent, which is due to the fact that in our business, the workers are not expected to ride for long distances like food delivery service industry and are provided more convenient options when they are placed with a specific dark store and can serve the areas only in proximity. Being able to deliver within 10 minutes doesn't mean that the riders will have to drive faster, but it is the efficiency of the whole process including fulfillment, the dark store operations and its proximity to the delivery areas on which this model thrives," the Zepto CEO told BusinessToday.In.

"Delivering groceries in 10 minutes is a game changing experience for customers and it reflects in our strong product-market fit metrics. Today, our month-on-month buyer retention is 65 per cent with an 88-point Net Promoter Score (NPS). This data has given us the confidence to expand the 10-minute model across the country. In just five months, we've launched 100 micro warehouses, each of which has the capacity to do 2,500+ orders/day , and we're planning to launch at an even faster rate going forward," the company's co-founder and CTO Kaivalya Vohra said.

Anu Hariharan from Y Combinator said that she is excited to double down and lead this round in Zepto. 

"Since Aadit and Kaivalya went through Y Combinator, we have observed that they're exceptional founders who bring relentless focus and "Doordash-like" execution to the quick commerce model. They originally launched with a different model, swiftly pivoted to quick commerce in August 2021 and are now adding 1,00,000 new customers every week, 60 per cent of them women. Their attention to detail on the logistics experience is unparalleled and this has enabled them to scale to most major metros in just 5 months. Simply put, we're confident Zepto will win in this space over the long-term," Hariharan said.

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