Unicorns are incredibly rare animals, even in the fiction world, and funding winters make them even harder to come by. Despite the fact that startups find themselves feeling the chill of a lack of venture capital, Zepto has managed to become India’s 84th unicorn with its latest fundraise. The beginning of the year saw 83 unicorns in India, though some have lost this title due to down rounds and value cuts. Founded two years ago by two teens, the quick commerce provider Zepto has now raises $200 million from its Series E round at an estimated worth of $1.4 billion – all primary capital. The ultimate aim is to build up a strong financial base prior to their expected 2025 listing.
This round of investment for Zepto was led by StepStone Group, representing their first direct investment in an Indian firm. Joining them were new investor Goodwater Capital, a venture capital firm based in California that specialises in consumer-focused investments. Existing investors such as Nexus Venture Partners, Glade Brook Capital and Lachy Groom also increased their commitment to Zepto with further investments.
This business is about execution, and we are succeeding because of our execution,” said Aadit Palicha, Co-Founder & CEO of Zepto. In spite of our deep frugality and worship of customers, we still have a lot to accomplish. We are here to build a generational company, and I truly believe this is only the beginning.”
The startup is looking to become EBITDA (earnings before interest, taxes, depreciation and amortisation) positive over the next 12-18 months. Zepto plans to launch its initial public offering in early 2015. Meesho, a homegrown e-commerce marketplace, became the first horizontal e-commerce company in India to turn profitable earlier this month.
The startup retrenched 251 employees in May to cut costs. It had earlier given pink slips to 300 employees in August last year. Palicha told Business Insider that Zepto intends not only to become EBITDA positive, but also to become cash flow positive before it goes public.
Although Zepto is striving to grow profitably, it has not retrench to cut costs. Palicha said that they have learned that growth and profits cannot be separated in a bear market.As Palicha says: We became better entrepreneurs in a bear market as a result of the current funding winter. The quality of decisions we made was not the same as it is today.”
Zepto has also realized that it cannot burn cash to grow revenues. It has stated that its cash burn is near zero, and that its cost of acquiring customers has decreased by 70% since last year.
At present, the startup Zepto is operating in seven cities and generating approximately $50-60 million per month. Intending to extend its reach further, once it establishes a successful, profitable system in the current areas of operation, Kaivalya Vohra – Co-founder & CTO of Zepto – We are determined to maintain our discipline and work hard to achieve EBITDA positive results. Their primary strategies for achieving this goal are product and technology. They are constructing one of the finest supply chain structures in India and putting investments into building up their customer-facing products. Technology excellence is an integral part of their ethos and Vohra is enthusiastic about what’s coming next.