(Bloomberg) — Zepto, an instant grocery delivery startup founded by two teenagers, has raised $100 million in a funding round led by Y Combinator, taking its valuation to $570 million within five months of starting services in India’s red-hot quick commerce segment.
The startup’s newest funding comes 45 days after a previous capital raise of $60 million at $225 million valuation, Aadit Palicha, co-founder and chief executive officer, said in an interview. Besides Y Combinator’s Continuity Fund, the latest round also received investments from new and existing backers like Glade Brook Capital Partners, Nexus Venture Partners, Breyer Capital and Silicon Valley investor Lachy Groom, the startup said in a statement.
Zepto, named after a minuscule unit of time, was started by Palicha and his childhood friend Kaivalya Vohra, both 19, who quit the coveted computer science program at Stanford University to return to India and get started in quick commerce. The startup, which promises to deliver grocery and daily essentials in 10 minutes, started in Mumbai earlier this year and has since expanded to Bangalore, Delhi and four other cities.
Read more about Zepto’s founding
Online grocery delivery is taking off in India, a $1 trillion retail market where grocery purchases account for the bulk of the retail spending. Zepto is competing against startups like SoftBank Group Corp.-backed Blinkit, Google-backed Dunzo and Naspers Ltd.-backed Swiggy, as well as the likes of Amazon.com Inc. and Walmart Inc.-backed Flipkart.
Zepto is growing quickly and its core unit economics are strong, Palicha said in the statement. Delivering within 10 minutes is “game changing,” said co-founder Vohra, the chief technology officer. The new capital will allow the Mumbai-based startup to grow its team and expand to more cities.
The firm has 100 so-called dark stores, or micro-warehouses, within high-demand neighborhoods and uses technology to perform tasks such as deciding store locations, placement of products and mapping out delivery routes to avoid traffic congestion. It now delivers over 2,500 items including fresh produce, cooking essentials, snacks and beverages, personal care items and home cleaning products.
The founders bring “Doordash-like” execution to the quick commerce model, said Anu Hariharan, a partner at Y Combinator’s Continuity Fund. The startup is adding 100,000 new customers every week, she said in the statement.
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