Quick delivery major Zepto has raised a fresh round of $450 million in primary and secondary fundraising. And joining me today is Aadit Palicha, who is the founder and CEO of the company. Aadit, thank you very much for joining us on ET Now, and wishing you and all at Zepto a very happy Diwali as well. Tell us about your fund raise. $450 million, what kind of valuation have you raised this money at?
First, it's wonderful to be here. Thank you for having me, and happy Diwali to you and your team and families as well. So yeah, we've just closed a pretty substantial financing. $450 million, the vast majority of which is primary, and the valuation of the company, once the primary closed, was about $7 billion. And so, those are the broad contours of the transaction.
Take us through the kind of growth the company has seen in the last 2 years, because we've seen your valuation go up from somewhere around $5 billion a year, year and a half back to now $7 billion as you said. What has been the growth in the company in this period as well?
Yeah. So, if you look at it, I think when we closed that transaction at $5 billion last year, with General Catalyst leading that transaction, we were doing about 500,000 orders per day, roughly. Over the past five quarters or so, we've gone from 500,000 orders per day to about 1.7 million orders per day. Right? And so, we've grown pretty substantially — 1.6, 1.7 million orders per day, which is where we're currently trending at. And so, we've grown pretty substantially. And yeah, we expect to continue to grow the business. I think more importantly, even as we've been able to grow from 500,000 orders per day to 1.6, 1.7 million per day, we've been able to keep showing our ability to turn dark stores profitable. And so, over the course of the past five quarters, hundreds of more dark stores have turned profitable even as we aggressively invested behind launching new stores and acquiring customers. And so, we think we're going to be able to keep turning more and more stores profitable over the next couple of quarters even as we keep growing order volume and net sales and GMV.
What could be the total account store counts now for you? Dark store counts? And we have how many cities?
It's well over a thousand and we're live in a few dozen cities. I'll refrain from giving the exact, but today we have a thousand dark stores and we plan to launch a few hundred more over the course of the next 12 months.
And is there a timeline for how many dark stores you want to reach and how many cities you want to be in over a period of next two to three years?
Look, our philosophy is — so the broad answer to the question is we're launching a few hundred stores over the next 12 months. But I think our deeper philosophy is that there's still so much growth in existing cities, right? Like I think for example, a city like Mumbai, the entire city of quick commerce would be doing close to 6, 7,000 crores of net sales is sort of our rough estimate. And despite that, we still make up a very small single-digit percentage of grocery e-commerce in Mumbai, right? And so, if all of us combined are still very small and significant percentage of grocery consumption even in the cities that we've been present in since the very beginning, we think that there's still probably 5, 10, 15x potential in most cities that we are currently live in. So, we want to keep growing in existing cities and we've seen substantial growth even over the past two, three months there. That being said, we are launching a few hundred new stores selectively and we think, by same time next year our store count would have substantially increased especially with this financing.
So, 450 million dollars, a large part of it is primary for you. Can you also take us through the kind of cash that you have in your books now and will this growth capital be enough for the next few years or you will have to come back to the market again for the growth?
So look, I think we've got — without giving too many specifics, we're close to a billion dollars of net cash in bank now and we're very well capitalized. Long story short, we're more than capitalized to continue to grow and like I mentioned earlier, even as we're continuing to grow, we're continuing to see operating leverage and improving our bottom line quarter on quarter. We think we're going to show a couple quarters of consistent bottom line improvement and even as we speak, we're on track to do that and we've been able to continue to grow volume. And so I think with close to a billion dollars of net cash in bank, we're extremely well capitalized. That being said, it is publicly known and we are moving towards an IPO pretty soon. In fact, now that this financing is closed, that was the main thing that we wanted to get done first, we should pretty rapidly be making strides there. So I think you'll probably see that happen. But to answer your question, from a capitalization perspective, we're in a pretty good place with close to a billion dollars of net cash in bank.
And when you say that you're going to come back, come to the public market through an IPO, is there a timeline that you have? Now that your funding has closed ahead of Diwali, are we going to see an IPO from Zepto before the next Diwali?
So I think I'm not allowed to give exact specific timelines. Candidly, that's what I've been told by my team. But what I can say is that we're moving towards it imminently and you'll be seeing a lot of movement there very soon. Not in many, many months, but imminently. At least you should be seeing some progress.
Give me a color of your investors in this round of fund raise. Any new investors that have come in?
Yeah. So, the largest check obviously, through a combination of multiple investors, but the largest check certainly came from CalPERS, California State Pension Fund. We also had all our existing investors come on board, so we had General Catalyst, Avenue, we had Lightspeed, DST, Goodwater, and a few other of our key investors. But the largest check came from an investor that hasn't featured much before, at least as per my knowledge, in Indian private markets, and they put in I think one of the larger checks in private transactions that they've done recently. So, yeah, California State Pension Fund and a combination of our key investors, basically.
And if I can ask you, you articulated that you want to expand yourself over the next 1 year or 12 months. The entire proceeds will be used entirely for expansion or is it new verticals that you're also looking at as part of your expansion plan?
So, look, right now we're not planning to invest capital behind launching new businesses. I think we've got, obviously, the core business that we're going to continue to double down on. We've got Zepto Cafe — by the way, if I'm allowed to, I'll show you where my — that's where my coffee and snacks come from. But yeah, we've got the core business with Zepto Cafe. We are meticulously scaling pharmacy right now as we speak as well. That's long story short, we've got our core verticals, we're going to continue to double down in them. And so, all the capital that we invest goes behind new store launches, behind customer acquisition, behind building capabilities in-house on tech as well. That's one of the meaningful areas of investment we have. We are generating pretty substantial intellectual property within the business as well, whether it's supply chain product, whether it's product that automates a lot of financial processes, whether it's consumer-facing products like search or our advertising business. So, all of that tech intellectual property that we're creating internally, plus obviously store launches and customer acquisition — that's where the capital goes towards. But in a nutshell, we are doubling down with the core verticals right now.
Also, if you can give us a sense of how quick commerce as a segment is growing. We've seen aggressive discounting across the board by key players there. Are you seeing that kind of aggression on key markets where you are? And what kind of market share do you have in some of the key markets like a Bengaluru or a Mumbai or a Delhi or Hyderabad?
Look, I think from our perspective, what we believe, and I think most consumer analysts, investors, etc., will probably agree to over the long run, is that the right metric over the long run is unit and volume growth. Right? We believe that at least that's what we believe for our business, the metric that we optimize towards. So, we're focused on unit and volume. And that for us means how many orders are we doing per day. And what I can tell you is we're doing 1.6, 1.7 million orders per day. It's grown around 20% over the past 3-4 months, and we think that that will continue to grow. And so, the thought process is that the way that we're growing, we should see pretty meaningful, above trend growth for the next few years. And even over the next 12 months, I think we're talking about adding a million orders per day from where we were a few months ago versus same time next year. I think we'll add a pretty substantial amount of volume. So, that's the thought process. I can tell you, just from a unit and volume business, we're seeing our volume grow. We think that's a key top line metric. And over the long run, that number, or over the next 12 months, we think it'll grow substantially, and I don't think that slows down. That's at least my point of view looking at the overall market, and I'm sure other participants in the market are experiencing something similar.
