Zomato, Swiggy Were Ready To Pay Rs 7500 Crore For This Teenagers’ Startup: Find Out Why?
Talks were held between Zomato, Swiggy and Zepto regarding the latter’s acquisition by either of the former.
Although the talks did not materialise any results, it is notable since it reflects the competitive intensity in the quick commerce space in India.
It also speaks to how Zepto is viewed by the two established startups.
According to sources, the valuations offered were “pretty aggressive” and far above the valuation of $570 million the last round was raised at.
Apparently Zomato had offered a buyout of close to a billion dollars and Zepto was mulling over Swiggy’s offer as well.
Although Swiggy’s top leadership met Zepto, talks did not reach the offer stage.
Swiggy wanted consolidation and the opportunity to remove a competitor from the market by acquiring it.
Discussions did not get to the stage where it could be decided how Zepto would be integrated with Swiggy’s Instamart grocery delivery service.
For Swiggy, it was to be essentially an “acquihire” and Instamart’s current team would continue to run the operations.
Zomato also has a stake in the game since Blinkit (formerly Grofers) which it has a 10 percent stake in would have a direct rival in Zepto.
However, Zepto founder Aadit Palicha wanted independence and freedom to build his company which it wasn’t clear Zomato would allow.
So he decided to opt for a funding round that will value it at $1.1 Billion.
New Retail Segment
Zepto is the latest startup to enter the Quick Commerce space.
Also known as q-commerce, quick commerce refers to a new sub-vertical of online grocery segment which promises deliveries within 10-30 minutes of ordering.
It makes use of micro-warehouses located in high-demand neighborhoods.
As mentioned earlier, all this buzz has led to considerable attention being heaped on Zepto.
The startup was founded in late 2020 by Aadit Palicha (also CEO) and childhood friend Kaivalya Vohra (CTO), both 19.
Both were studying in the coveted computer science program at Stanford University which they dropped out of to return to India.
They decided to try their hand at entrepreneurship in a country which was generating unicorns on a near daily basis.
Funding Spree, Competition
The environment was also conducive given the pandemic-induced nationwide lockdowns which increased the demand for online grocery deliveries.
Just last month it raised $100 million in a round led by YC Continuity at a valuation of $570 million.
And just 45 days before that, the company had raised capital of $60 million at a $225 million valuation.
Presently, it faces stiff competition in the segment from several established or backed by established players such as Blinkit, Swiggy, Google-backed Dunzo, Walmart-owned Flipkart, Amazon, Tata-owned BigBasket, and Reliance-JioMart.