Zepto, an online grocery delivery service, secured $200 million in Series-E funding, valuing the business at $1.4 billion and elevating it to the status of 2023’s first unicorn.

StepStone Group, Zepto, a US-based private markets investment business founded in the wake of the epidemic, spearheaded the fundraising, it was announced on Friday. 

Additionally, it’s the first direct investment StepStone Group has made in an Indian business. 

Goodwater Capital, a California-based venture capital firm with a consumer-focused focus, also invested in the round. Noteworthy follow-on investments in Zepto were made by long-term investors such as Nexus Venture Partners, Glade Brook Capital, Lachy Groom, and others.

The rapid commerce company Zepto was valued at $900 million in 2022 after raising $200 million in a Series D fundraising round spearheaded by the Continuity Fund of the American technology startup accelerator Y Combinator. Aadit Palicha and Kaivalya Vohra, two Stanford University dropouts who started Zepto in 2021, plan to float the company on the public market within the next two to three years. In May of this year, Zepto promoted a number of significant executives in preparation for its intention to list.

Zepto essentially sends over 6,000 supermarket items in 10 minutes via a nationwide network of delivery hubs. The fast commerce model has come to be criticized for its excessive capital burn and the absence of a sustainable business plan.

This fundraise, in the midst of the deepest downturn in capital markets in over a decade, validates Zepto’s best-in-class operating discipline. Zepto has proven the quick commerce business model by turning the majority of its dark stores fully EBITDA positive. Zepto’s burn has reduced significantly, and with this trajectory, the company will be fully EBITDA-positive in 12 to 15 months. More importantly, Zepto has delivered these profitability numbers while continuing to grow rapidly,” Zepto said in a statement.

According to the corporation, revenues have increased by 300% year over year and are expected to reach $1 billion in annualized sales over 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,” said Aadit Palicha, co-founder and CEO, of Zepto.

The announcement of investment comes as other platforms for speedy delivery, including Dunzo, are struggling to make ends meet.

Even with this capital, we want to maintain our discipline, avoid complacency, and push hard to hit EBITDA positivity. In that journey, the biggest drivers of P&L improvement for us are based on technology and product,” said Kaivalya Vohra, co-founder and CTO, of Zepto.

Zepto received special advice on the transaction from Avendus Capital.