What Funding Winter? Zepto raises $200 mn to become the first unicorn of 2023
- Existing and new investors invest $200 mn in the quick commerce company ahead of its public listing plans.
- The Series E round was led by
StepStone Group, which is its first direct investment in an Indian company.
- Startup intends to become cash flow positive ahead of its public listing in 2025.
With this round, the startup has brought on board a bunch of new investors. This round was led by StepStone Group and this investment into Zepto is their first direct investment in an Indian company). Additionally, Goodwater Capital, a consumer-focused venture capital firm based in California, joined the round as a new investor. Notably, existing investors, like Nexus Venture Partners, Glade Brook Capital, Lachy Groom and more, doubled down on their investments in Zepto with meaningful follow-on investments.
The startup is looking at becoming EBITDA (earnings before interest, taxes, depreciation and amortisation) positive over the next 12-18 months. And by early 2015, Zepto is looking to launch its initial public offering and take the company public. Earlier this month, Meesho, a homegrown e-commerce marketplace, became the first horizontal e-commerce company in India to turn profitable.
In May, the startup retrenched 251 people as it was looking to cut costs. It had earlier handed pink slips to 300 employees in August last year. Talking to Business Insider, Palicha said that not only does the company seek to become EBITDA positive but Zepto will be cash flow positive by the time it hits public markets.
Even though Zepto is pursuing profitable growth, it has not resorted to any retrenchment to cut costs. In a bear market like this, Palicha said that they learned that there is no either or when it comes to growth and profits. The current funding winter has taught these founders many things early on. Palicha says: “We have become better entrepreneurs in a bear market.The quality of decisions we took were not the same as they are today.”
Like many startups Zepto too seems to have realised that it cannot burn cash to grow revenues. The company has said that its cash burn is near zero, the cost of acquiring customers is down 70% compared to last year.
Zepto is present in seven cities right now. The startup’s revenues are to the tune of $50-60 mn per month. The startup plans to enter new cities once the existing ones become profitable.
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