Zepto had a valuation of $1.4 billion in August 2023, when the company last raised $235 million.
This is the second funding round for Zepto in less than a year; the latest round saw participation from New York-based Avenir Growth Capital and Lightspeed Venture Partners as well as a maiden investment from Avra Capital
Grocery startup Zepto has raised $665 million in an investment round. With the latest funding that comes less than a year after its last fundraising, Zepto’s valuation has now increased to $3.6 billion, according to a company statement released on Friday.
Zepto had a valuation of $1.4 billion in August 2023, when the company last raised $235 million. The startup was founded three years ago in 2021.
The latest round saw participation from New York-based Avenir Growth Capital and Lightspeed Venture Partners as well as a maiden investment from Avra Capital — a fund launched by former Y Combinator and Andreessen Horowitz investor Anu Hariharan. Some existing investors also participated, Zepto said in the statement on Friday.
The deal adds heft to Zepto’s balance sheet as it competes with Zomato-owned Blinkit and Swiggy’s Instamart in a highly competitive market marred by high investments and thin margins. Flipkart is also reportedly preparing to enter into the quick commerce space.
In terms of business performance, Zepto’s gross merchandise value (GMV) has “multiplied year-on-year to a base of $1 billion+”, and nearly 75 per cent of its stores are fully EBITDA positive as of May 2024. These stores previously took 23 months to achieve profitability; today, they only take six months, according to the Zepto statement.
Aadit Palicha, co-founder and CEO of Zepto, said, “This dynamics 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.”
If Zepto is able to achieve this, the company will be ready to go public relatively soon, he added.
Indian customers are increasingly adopting quick commerce services, which have recently expanded beyond groceries to sell mobile phones, tech accessories and gifting items, giving competition to e-commerce giants such as Amazon.com and Walmart-owned Flipkart and squeezing the neighborhood mom-and-pop stores.
Goldman Sachs had said in April quick deliveries account for $5 billion, or 45% of India’s $11 billion online grocery market and are set to expand to $60 billion, or 70%, by 2030.
Zepto had a 28% market share as of January 2024, up from 15% in March 2022, according to HSBC. Blinkit had a 40% market share as of January and Instamart had 32%.
