Zepto is building a significant warchest as it takes on the likes of Zomato and Swiggy, with a fresh $665Mn fundraise. The round, which is among the largest single round in the country, also results in Zepto’s valuation double from $1.4Bn to an impressive $3.6Bn in less than a year.
The Series F funding round, which Zepto described as “highly oversubscribed,” was co-led by Glade Brook Capital, Nexus Venture Partners, and StepStone Group. The round also saw participation from new investors such as Avenir Growth Capital, Lightspeed Venture Partners, and Avra, a new fund founded by former Y Combinator executive Anu Hariharan. Interestingly, DST Global, an early investor in Zepto’s competitor Swiggy, also co-led the round.
With the new capital, Zepto plans to significantly expand its network of dark stores from 350 to over 700 by March 2025. The expansion will include entry into new cities such as Ahmedabad, Chandigarh, and Jaipur. This development comes after the quick commerce firm’s revenue surged by 140% over the past year, and the company expects its annualized gross merchandise value (GMV) to exceed $1 billion soon. Furthermore, approximately 75% of Zepto’s dark stores are now EBITDA positive (a notable achievement) according to the company.
Speaking of Zepto, the firm’s business model revolves around providing rapid delivery of a wide array of products, including grocery items and electronic gadgets, to consumers in urban Indian cities. The company has established a network of strategically located dark stores, or small warehouses, which enables them to fulfill orders within a matter of minutes. It currently operates in a highly competitive market, facing rivals such as BlinkIt (owned by Zomato) and Swiggy’s Instamart. These companies, along with Zepto, are transforming the grocery delivery landscape by leveraging a dense network of dark stores.
“We’ve gone from 0 to 1 billion-plus in sales, or GMV, in 29 months, that is faster than any other internet company before us… Even on a base of over a billion dollars at this point, we are growing 100 per cent-plus year on year. And that for us is one of the big drivers of this fundraise,” Aadit Palicha, co-founder and CEO of Zepto, commented on the matter. “Over the next 12-18 months, although it might fluctuate, but we’ll still be pretty close to operating cash flow positive, and the idea is to keep in that direction, get the business to a place where we can list next 9-12 months,” he added.
This comes at a time when there has been a rapid growth of the quick commerce sector in India, a $4 trillion economy – something that has caught the attention of investors and analysts alike. Goldman Sachs has estimated that the total addressable market for quick commerce in India’s top 40-50 cities could reach $150 billion. Indian consumers have a strong preference for “hyper-local” buying – purchasing small quantities frequently from nearby stores. The likes of Zepto capitalize on this by offering a convenient and time-saving solution that caters to this specific need. Unlike traditional grocery delivery models with longer wait times, the hyper-local approach of quick-commerce startups in India allows customers to fulfill their immediate needs for groceries and other essentials within minutes, integrating into their busy lifestyles.
