Within months of its launch, quick commerce grocery delivery app Zepto has raised $60 million in an initial funding round, an unusual feat in the hyperlocal delivery sector which has not witnessed much early-stage activities in the past five to six years.

Founded by 19-year-old Stanford dropouts Aadit Palicha and Kaivalya Vohra, Zepto delivers groceries within 10 minutes in certain areas in Bangalore, Mumbai, and Delhi. Zepto’s average delivery time is around 8 minutes 40 seconds.

The 10-minute delivery service is called quick commerce which is popular among hyperlocal delivery start-ups. These start-ups operate using an inventory model which delivers groceries from their own dark stores or micro-warehouses in the neighbourhood.

Investors in the first round included US-based Glade Brook Capital, which has invested in US grocery startups Instacart and Good Eggs, and Indian food delivery app Zomato.

Nexus Venture Partners and Silicon Valley’s Y Combinator also participated in the fundraising with angel investors Lachy Groom, Manik Gupta, and Neeraj Arora. The Mumbai-based startup is now valued at $225 million.

Unlike the pure marketplace model, the dark store model gives greater control to these start-ups over inventory and operations. In India, BigBasket was the first to experiment with the concept and currently operates hundreds of such stores across India.

Zepto, formerly known as Kiranacart, also operates out of such dark stores and plans to utilise the funds to expand to 100 dark stores in more cities by the end of this year.

"We’re launching a new dark store every few days and we'll have a hundred in half-dozen cities by early 2022, each delivering a couple of thousand daily orders," co-founder and chief executive officer Aadit Palicha told Bloomberg.

Zepto was founded in September 2020, but launched services from April this year. Childhood friends Palicha and Vohra quit their computer science engineering program at Stanford University and came to Mumbai to start their own business. They studied their global competitors such as Berlin-based Gorillas and Turkey's Getir for months to understand how these firms gained traction in the last year during the pandemic. They then started their own delivery service and named it Zepto, meaning a minuscule unit of time.

The company is planning to launch services in Hyderabad, Pune, Chennai, and Kolkata within a month. Excluding the warehousing staff, the company has 300 corporate employees and plans to quadruple that over the next few months.

"Grocery delivery is growing at 200 percent annual rates and 10-minute grocery delivery alone has the potential of breeding a couple of $10 billion dollar startups," Palicha said.