Zepto, the rapidly growing quick commerce company, has successfully raised $340 million in its latest follow-on financing round, propelling its valuation to a remarkable $5 billion. This funding round marks Zepto’s third major capital infusion within the past year, bringing its total capital raised in the last 12 months to over $1 billion.
The company initially aimed to secure $400 million but opted to close at $340 million to minimize equity dilution for existing investors. The round was spearheaded by General Catalyst, with Dragon Fund and Epiq Capital entering as new investors. Existing backers such as StepStone, Lightspeed, DST, and Contrary also increased their investments.
Zepto’s funding boost comes at a time when quick commerce is gaining significant traction in India. Competitors like Flipkart and BigBasket are also venturing into the 10-minute delivery segment, while Amazon is rumored to be exploring similar initiatives. This growing interest underscores the rapid evolution of the quick commerce sector in the region.
Aadit Palicha, Zepto’s co-founder and CEO, highlighted the strategic reasons for the financing round. “Securing a lead investor of Neeraj Arora’s caliber from General Catalyst was an invaluable opportunity. Additionally, strengthening our balance sheet aligns with our goal of sustaining robust growth and operational leverage,” he stated.
The funding arrives as other players in the quick commerce space demonstrate the viability of the business model. For instance, Zomato’s quick commerce arm, Blinkit, outperformed its core food delivery service in both adjusted revenue and gross order value growth during Q1 FY25. In June, Blinkit raised $665 million in Series F funding, significantly boosting its valuation.
Zepto’s previous rounds include a $235 million Series E in August last year, which elevated its valuation to $1.4 billion, and an earlier $100 million raise in December 2021. With this latest round, Zepto is gearing up for an initial public offering (IPO) planned for approximately 12 months from now. The company aims to achieve profitability before its public debut.
Currently, Zepto operates around 350 dark stores across India’s top 10 cities and plans to expand into 10 more cities, increasing its store count to 700. As of May 2024, 75 percent of its stores are EBITDA positive, and its gross merchandise value has surged past $1 billion year-on-year.
Neeraj Arora, Managing Director at General Catalyst, expressed enthusiasm about the investment, stating, “We are excited to partner with Zepto and believe their quick commerce model is setting the standard for the future of e-commerce in India and beyond.”
The fresh capital infusion is expected to bolster Zepto’s balance sheet and support its growth trajectory as it approaches its IPO.
