(Bloomberg) — Zepto, an instant grocery startup founded by two teenagers, has raised $200 million in a funding round led by Y Combinator, taking its valuation to around $900 million within nine months of beginning 10-minute deliveries in India’s fast-growing quick commerce segment.
New investor Kaiser Permanente participated in the round that comes less than five months after the startup raised capital previously. Early investors Nexus Venture Partners, Glade Brook Capital and Silicon Valley investor Lachy Groom have all increased their investments, Zepto said in an announcement late Monday. That brings its total funding to $360 million.
Zepto, named after the minuscule unit of time, was started by childhood friends Aadit Palicha and Kaivalya Vohra who dropped out of Stanford University’s computer science program to return to India and become e-commerce entrepreneurs. They are both 19 years old.
The Mumbai-headquartered company’s 10-minute delivery promise has spurred rivals like Google-backed Dunzo, SoftBank Group Corp-backed Blinkit and Naspers Ltd-backed Swiggy. These are fighting for the attention of shoppers in India’s $1 trillion retail market along with established players Amazon.com Inc. and Walmart Inc.-backed Flipkart Online Services Pvt.
Zepto’s revenue has grown 800% quarter-on-quarter and it has slashed its cash burn by five times on a per-order basis, Palicha, chief executive officer, said in the statement. The startup’s team has expanded to 1,000 people and it has begun making profits in small micro-markets, or dense city neighborhoods served by a warehouse or dark store.
Zepto is now piloting a service to deliver coffee, Chai tea and other cafe items within 10 minutes in select areas in Mumbai in a new service it calls ‘Zepto Cafe’.
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