Zepto's Bold IPO Goal

In the world of private equity funding, it is said that bolder the vision, greater chances of landing up with funding. However, there some start-ups that are not just audacious but outlandishly audacious. You would normally not expect to meet a 20 year old entrepreneur and start-up founder talking about billion dollar valuations, but that is what Zepto is all about. Before we get to the business model of Zepto and its IPO dreams, it plans to disrupt the food delivery grocery delivery business. Quick commerce is already quite hot in India but Zepto appears to be taking quick commerce or Q-Commerce to a different level altogether. Here is what Zepto is all about.

What exactly is Zepto all about?

Like most quick commerce stores in India, Zepto also promises quick delivery. But the speed is the point here. It is not just quick, but it is ultra-quick. For instance, everything available in the grocery stores can be made available at your doorstep in 2 minutes flat. Yes, you hear it right, just 2 minutes flat. Now, Zepto is an interesting story. It is into the business of online vegetable and grocery selling through its agnostic platform. The Zepto model has already been successful in many cities like Bengaluru, Hyderabad, and Chennai. What most though was impossible is being promised by Zepto. Most of the quick commerce players like Instamart and Dunzo are struggling to meet 10 minutes and 15 minute promises. And, here Zepto is promising flat 2 minute delivery of groceries and vegetables.

Now, Zepto is going beyond these vegetable and groceries and delivering a lot more. For instance, with the launch of the Zepto Café, it can now deliver tea and snacks within 10 minutes in a crowded place like Mumbai, notwithstanding the traffic snarls and unruly traffic in most places. As much as the idea sounds audacious and even ridiculous at times, what cannot be denied is that Zepto is catching up fast. In fact, the no one thought that this start-up idea would be so amazingly successful. The 2 founders of this Zepto idea, Adit Balicha and Kaivalya Vohra, somehow maintained their conviction on this idea and the hopes were not fully belied. They did manage to deliver and meet these rather stringent deadlines promised to people.

For now, Zepto is still a Metro phenomenon and they have selected Southern states like Bengaluru, Hyderabad, and Chennai, where the levels of digital literacy are very high and also the infrastructure is much better than many of the North based cities in India. That is a double whammy and makes the job a lot easier for players like Zepto. While the app started off operations in the Silicon Valley replica of Bengaluru, this start-up is now making inroads in popular other metro cities like Chennai and Hyderabad.

To top it, the model is profitable

In the digital start-up world; profits and growth do not normally go together. Growth normally means cash burn and that means huge losses for number of years. That is what most of the major start-ups of the last 10 years have gone. The likes of Zepto are looking at profits at an early stage itself. In fact, the company has reportedly made profits of several crores. Now the founders of Zepto have even expressed confidence that the IPO of the company could be expected in the next 2-3 years.

Proof of the pudding lies in the eating and Zepto is surely getting the funding taps rolling. That is done after looking at the books, so if the company is claiming profits, it surely is. Zepto raised $100 million in a Series C round led by Y Combinator’s Continuity Fund in December 2022. That was done at a valuation of $570 million, representing a doubling of valuations from its previous round. To top it all, it could well enter the unicorn club with valuations scaling about $1 billion very soon. In a market where quick commerce players have been guzzling cash without concomitant benefits, Zepto has shown a way to grow and deliver on promises without having to burn too much cash. In quick commerce, that would be an intriguing feather in the cap.