Zepto has raised $665 million in a funding round valuing the Indian quick commerce at $3.6 billion, as it looks to double its store count amid rising competition and amp up its plans to go public by 2025.
The biggest funding round of the year was co-led by existing investors Glade Brook, Nexus, and StepStone, with Goodwater and Lachy Groom doubling down as well. Avenir, Lightspeed, and Avra (Anu Hariharan’s new fund) joined Zepto’s cap table as new investors, among others.
Zepto’s funding comes nine months after it raised $200 million in a Series E round led by StepStone Group at a $1.4 billion valuation.
Zepto, which competes with Reliance-backed Dunzo, Swiggy’s Instamart, and Zomato-backed Blinkit, was launched by Aadit Palicha and Kaivalya Vohra who dropped out of Stanford University to grab a share of the fast-growing quick commerce market in India. They are vying for the attention of online shoppers in India’s $1-trillion retail industry, along with giant players Amazon.com and Walmart-backed Flipkart.
What drives players to fight for the lucrative pie by offering competitive discounts, often at the cost of their margins, is the user penetration rate in India for quick commerce, which is expected to touch 3.8% by 2028 from 1.8% in 2024.
Flush with funds, quick commerce companies that started out delivering groceries and perishables slowly expanded their offerings to include books, plants, phone chargers, board games, and bouquets – all delivered within minutes. Last week, Zomato said it will invest an additional Rs 300 crore in Blinkit.
The third-biggest player after Blinkit and Instamart, Zepto claims that its GMV has multiplied year-on-year to a base of $1 billion+, and ~75% of the company’s stores are fully EBITDA positive as of May 2024. Moreover, these stores previously took 23 months to achieve profitability; today, they only take six months.
“This dynamic of stores turning profitable faster and faster has enabled Zepto to grow rapidly while simultaneously achieving near EBITDA positivity at a company level. We plan to continue operating with fiscal discipline as we scale from 350 stores to 700 stores by reinvesting the capital generated from mature stores back into the business.” Palicha said.
“If we are able to achieve this while continuing to delight customers, I believe we will be ready to go public relatively soon,” he added.
This fundraise also marks the debut investment for Avra Capital, a growth equity fund started by Anu Hariharan (the former MD of Y Combinator Continuity).
“Zepto may appear to be a mere 10-minute quick commerce company at first glance, but they are transforming Indian e-commerce by creating the ‘Hyperlocal Amazon,’ combining affordable prices with local convenience,” Hariharan said in a statement.
Zepto’s funding contributes to the resurgence of megadeals, defined as transactions exceeding $100 million. In May, at least six megadeals totalling $1.07 billion were completed, marking the highest value and volume recorded in the past two years, according to exclusive data compiled by DealStreetAsia.
