Zepto, an Indian 10-minute grocery delivery app, raises $100 million.

As it grows into more locations, Zepto, a Mumbai-based startup that operates a 10-minute rapid grocery delivery service, has more than doubled its valuation to $570 million from $225 million less than two months ago.

According to the two companies, Y Combinator's Continuity Fund led the $100 million Series C round in Zepto. Glade Brook, Nexus, Breyer Capital, Lachy Groom, Global Founders Capital, and Contrary Capital all joined the round, bringing the total amount raised to $160 million.

The firm, created by two 19-year-old Stanford graduates who left last year, emerged from stealth status in November. But, long before it started talking about the business, Zepto had piqued the curiosity of the local startup community, with people starting to voice their opinions about the company.

Zepto, whose name is a pun on a mathematical word, provides a 10-minute grocery delivery service, a category that has grown extremely popular in numerous areas of the world in recent quarters. Swiggy and BlinkIt (previously known as Grofers), two well supported players, have also entered the rapid grocery delivery sector.

Zepto's appearance in the scene was also coincidental. Aadit Palicha and Kaivalya Vohra had returned to India for a vacation shortly before the pandemic struck.

The adolescents, who had previously worked together on a number of initiatives, including a ride-hailing commute app for schoolchildren, were suddenly imprisoned in their Mumbai homes. As the pandemic raged, the two struggled to get their groceries, despite the fact that grocery deliveries, deemed important by the local authorities, were still authorised in parts of the country.

"We thought that the online play of the Indian grocery delivery area, which is one of the world's largest," Palicha said in a previous interview, without elaborating.

Palicha said in an interview last week that the firm is overwhelmed by the love and excitement it is receiving from customers, but it does not want to "get comfortable."

"We are a little too critical of ourselves and hold ourselves to extremely high standards." People are pleased that their deliveries are arriving in 10 minutes or less, but can we continue to focus on expanding our SKUs and increasing our unit economics?" he said. (At the same time, Zepto is concerned about keeping its staff and delivery partners satisfied, citing attrition and internal feedback.)

Vohra claims a 65 percent month-to-month buyer retention rate and has established a network of micro-warehouses, each of which can handle over 2,500 orders per day.

According to a statement from Sanford C. Bernstein, the stakes are high in India's e-grocery business, which is expected to be worth $25 billion by 2025. "By 2025, online grocery penetration is predicted to rise to 3-5 percent, up from less than 1% presently."

Zepto currently operates in Bangalore, Delhi, Gurgaon, Chennai, and Hyderabad, with plans to expand to Pune and Kolkata in the near future. It has put up a maze of over 100 dark storefronts across these cities, which it claims are geared for speedy deliveries, to assure instant deliveries.

"We're looking at a fairly insane runrate," he explained. "We have grown our business tenfold in the last one and a half months." "And now we're working on growing another ten times by February or March," Palicha said.

Another thing that is going well for Zepto is the talent it has been able to attract in recent months. Several senior executives from Flipkart, Amazon, Uber, Dream 11, and Pharmeasy have joined the firm.

According to Palicha, one of the reasons so many executives have joined Zepto is that it has enabled those who had relocated from Mumbai to Bangalore to return to their hometown. However, the startup's fast growth, disciplined execution, and goals have made it appealing to those with similar tastes, according to him. "We've managed to walk the walk," he stated.

"We are thrilled to be doubling down and leading this round in Zepto" (YC W21). "We have seen that Aadit and Kaivalya are great founders who bring relentless concentration and "Doordash-like" execution to the rapid commerce model since they went through Y Combinator," said Anu Hariharan, a partner at Y Combinator, in a statement.