US-based StepStone Group’s debut Indian investment propels Zepto to unicorn status 

New York-headquartered private markets investment firm StepStone Group has led a $200-million Series E funding in to quick commerce start-up Zepto, helping it become the first unicorn of the year in India. The deal valued the Bengaluru-based company at $1.4 billion. The transaction marks the first direct investment of StepStone in an Indian company. 

Additionally, Goodwater Capital, a consumer-focused venture capital firm based in California, joined the round as a new investor. Existing investors including Nexus Venture Partners, Glade Brook Capital, Lachy Groom, doubled down in Zepto with meaningful follow-on investments, the company said in a statement.

The funding round is notable on several fronts. Firstly, it stands out among a limited number of big-ticket fundraisings this year, as the larger start-up ecosystem grapples with funding challenges. Secondly, the quick delivery sector has faced challenges due to its high cash burn model. Key competitors like Swiggy’s Instamart, Zomato’s Blinkit, and Tata-owned BigBasket have shifted from the initial 10-minute delivery focus. Many have also shut down unprofitable dark stores to optimise costs.

Zepto claims that it has managed to turn a majority of its dark stores fully EBITDA positive. The company also said it burn rate has reduced significantly and it will be fully EBITDA positive in 12 to 15 months. The company said it has grown its sales by 300 per cent year-on-year and will likely achieve $1 billion in annualised sales within the next few quarters. 

“This business is about execution and we are succeeding because our execution is strong. Our culture of deep frugality and worshipping customers has gotten us here, but there is still so much for us to achieve. We are in this to build a generational company and it truly feels like this is just the beginning,” Aadit Palicha, Co-founder & CEO of Zepto, said.

The company also reiterated its IPO plans and said it aims to go public by 2025 as a profitable company.