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Zepto has more than doubled its valuation to $3.6 billion from $1.4 billion in less than a year<\/a> in a new funding round of $665 million as the Mumbai-based startup intensifies the quick commerce competition in the world\u2019s second largest internet market.<\/p>\n Zepto sells and delivers everything from grocery items to electronic gadgets within 10 minutes to consumers in urban Indian cities. The rapid-delivery model is thriving in India<\/a> even as most startups in the space have cratered in developed markets<\/a>.<\/p>\n Glade Brook, Nexus and StepStone Group co-led the \u201chighly oversubscribed\u201d Series F round, Zepto said. Avenir, Lightspeed and Avra (former YC Continuity exec Anu Hariharan\u2019s new fund<\/a>) as well as existing backers<\/a> Goodwater, Lachy Groom and Contrary also invested in the round, the startup said.<\/p>\n DST Global, an early backer of Swiggy, a Zepto rival, also co-led the new funding round, according to two people familiar with the matter. Zepto didn\u2019t disclose DST Global\u2019s participation in the new funding round and declined to comment.<\/p>\n Zepto is competing with BlinkIt (owned by Zomato) and Swiggy\u2019s Instamart to transform consumer shopping habits by offering convenient services.<\/p>\n These quick commerce companies have established numerous discreet warehouses, known as \u201cdark stores,\u201d throughout urban India. By strategically locating these facilities within a few kilometers of high-demand residential and commercial areas, they can fulfill orders within minutes of purchase.<\/p>\n \u201cBecause less space is needed to stand up a dark store than normal storefronts, Zepto can create a wider network of stores across a city allowing for short delivery times,\u201d Will Robbins, a partner at Contrary, wrote<\/a> in his thesis.<\/p>\n Zepto aims to expand its network of dark stores to over 700 by March 2025. The startup reported impressive growth, with a 140% year-on-year increase and its annualized gross merchandise value (GMV) sales is on track to exceed $1 billion. It works with over 50,000 delivery partners, and adding over 5,000 delivery partners each month.<\/p>\n 75% of its dark stores were fully EBITDA positive as of last month. Improved efficiency and scale mean that a dark store that previously took 23 months to achieve profitability now reaches that milestone in six months, Zepto said.<\/p>\n The growth of quick commerce firms in India, a $4 trillion economy, has surprised many investors and analysts especially because many similar platforms collapsed in other markets.<\/p>\n \u201cIn India, there is a culture of buying hyper-locally. This doesn\u2019t really exist in other parts of the world. Customers in India buy small-ticket items multiple times a week hyper-locally and quick commerce gives them hyper-local, high-proximity and low-ticket use case,\u201d Zepto co-founder and chief executive Aadit Palicha told TechCrunch in an interview. \u201cNo other format in grocery, even in the offline world, has been able to make similar offerings to consumers.\u201d<\/p>\n Quick commerce startups in India are beginning to increasingly expand beyond the grocery category. One firm promises to deliver high-ticket items such as smartphones and gaming consoles to its customers in 10 minutes.<\/p>\n Palicha, who co-founded Zepto with Kaivalya Vohra when they both were just 19, said Zepto does offer electronics accessories like chargers and cables, but the firm isn\u2019t looking to offer high-end electronics on its platform.<\/p>\n \u201cWe\u2019re not really getting into smartphones, high-ticket fashion and laptops. We\u2019re more interested in categories that are relatively lower-stake purchases like household appliances, undergarments, general merchandize, toys, beauty and cosmetics, and home and kitchen products. We\u2019re seeing resonance there,\u201d said Palicha.<\/p>\n The startup, currently operational in top Indian cities, plans to expand to select smaller cities in the coming months. Palicha said Zepto is encouraged by the initial reception from cities including Jaipur where the local offline offerings aren\u2019t able to fully meet customer demands.<\/p>\n \u201cIf we are able to achieve this while continuing to delight customers, I believe we will be ready to go public relatively soon,\u201d he said in a statement.<\/p>\n Avenir, a New York-headquartered venture firm, has been tracking Zepto for about three years before it finally invested in the current round. Zepto is able to break the traditional trade-offs of retail in India, said Ben Jubas, a partner at Avenir, in an interview with TechCrunch.<\/p>\n \u201cIt has an opportunity to become a massive commerce business due to the depth in its value proposition and operational rigor,\u201d he said. \u201cIn our view, it\u2019s second to none.\u201d<\/p>\n Some industry analysts predict that quick commerce companies will significantly erode the market share of major e-commerce players<\/a> like Amazon and Flipkart. Jubas said he subscribes to this thesis, but it\u2019s up to Zepto\u2019s management on how it intends to make a play with that.<\/p>\n According to Goldman Sachs, the total addressable market in grocery and non-grocery for quick commerce companies in the top 40-50 cities is about $150 billion.<\/p>\n<\/div>\n