Zepto, the popular instant grocery delivery platform, is gearing up to raise nearly $650 million from a combination of existing and new investors. This upcoming funding round is expected to catapult Zepto’s valuation to approximately $3.5 billion, more than doubling its previous valuation.

Leading this newest funding round are Nexus Venture Partners and StepStone Group, both of whom are existing backers of Zepto. They are joined by existing investor Glade Brook Capital and new investors including Avenir Growth, Lightspeed Venture Partners, DST Global, and Avra. Nexus Venture Partners, along with its limited partner StepStone Group, will contribute a significant portion of the total $650 million, making this their largest investment to date.

This round of investment comes just eight months after Zepto’s successful fundraising in August 2023, when the company secured $231 million at a valuation of $1.4 billion. That round ended a period of drought in unicorn creation within the Indian startup ecosystem and brought in new investors like Goodwater Capital.

Speaking fo Zepto, founded in July 2021 by Aadit Palicha and Kaivalya Vohora, it has quickly emerged as a significant player in the quick commerce space, a sector characterized by the promise of rapid 10-minute deliveries. Being the sole pure-play quick commerce company among its competitors presents both advantages and challenges for Zepto. Unlike its rivals, which benefit from established food delivery businesses (Zomato and Swiggy) or the backing of a giant conglomerate (Tata Group in the case of BigBasket), Zepto needs to focus solely on quick commerce for revenue generation.

Today, it operates in a highly competitive market, facing established players like Zomato-owned Blinkit, Swiggy Instamart, and Tata’s BigBasket (BB Now). These companies are all vying for dominance in the quick commerce sector, which promises delivery of groceries and essential items within minutes of an order being placed. Currently, Blinkit holds the top position with an estimated market share of 40-45% and processes over 700,000 orders daily through 526 dark stores.

In contrast, Zepto handles approximately 550,000 orders daily across 340 dark stores in seven Indian cities. The company’s annualized gross order value stands at $1.2 billion, with a higher take rate of 23%, compared to Blinkit’s 19%. Zepto’s financial performance over the past year has been marked by extraordinary growth. In FY23, the company achieved a year-on-year revenue growth of 1,339%, increasing its revenue from INR 142.36 crore in FY22 to INR 2,024 crore. However, this growth came with an increase in net losses, which widened threefold from INR 390 crore in FY22 to INR 1,272 crore in FY23. Despite these losses, the company is optimistic about achieving EBITDA breakeven by September.