In a significant development for India’s quick commerce space, Zepto, an instant grocery delivery startup, is set to raise approximately $650 million from a mix of existing and new investors, Moneycontrol reported citing sources.
This latest funding round will propel Zepto’s valuation to an impressive $3.5 billion, it added.
Leading this substantial investment are existing stakeholders such as — StepStone Group, Nexus Venture Partners, and Glade Brook Capital. They are joined by new investors Avenir Growth, Lightspeed Venture Partners, DST Global, and Avra.
Nexus Venture Partners and StepStone Group are spearheading the round, contributing the majority of the funds.
This funding surge comes on the heels of Zepto’s last major capital infusion in August 2023, when the Y Combinator-backed startup raised $231 million at a $1.4 billion valuation.
The rapid increase in valuation highlights Zepto’s robust market position and investor optimism in its strategic direction.
Zepto competes in a fiercely contested market against major players such as Blinkit (owned by Zomato), Swiggy Instamart, and Tata’s BigBasket (BB Now). Currently, Blinkit holds the largest market share, accounting for 40-45% of the quick commerce sector, with Zepto trailing close behind.
Unlike its competitors, Zepto focuses exclusively on quick commerce, which necessitates rapid growth and substantial capital to differentiate itself.
The company’s valuation trajectory is noteworthy. From $250 million in 2021, it surged to $900 million in 2022, then to $1.4 billion in 2023, and now is expected to hit $3.5 billion in the current funding round.
Zepto’s operational metrics are equally impressive. The company handles 550,000 orders daily through 340 dark stores across seven cities in India. Its annualized gross order value stands at $1.2 billion, with a take rate of 23%.
For comparison, Blinkit processes over 700,000 orders per day through 526 dark stores, with a take rate of 19%.
This competitive edge is vital for Zepto as it aims to achieve EBITDA breakeven by September 2024 and reduce its cash burn to single-digit millions.
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