Quick commerce startup Zepto is set to raise $340 million in a new funding round, boosting its valuation to $5 billion, according to sources. Despite initially planning to raise $400 million, Zepto capped the round at $340 million. General Catalyst is contributing $250 million, with Mars Growth adding around $50 million, while the rest will come from existing investors.
Zepto, founded by Aadit Palicha and Kaivalya Vohra, has become a standout player in India’s quick commerce sector, which delivers everything from electronics to vegetables in 10-20 minutes. This concept has gained significant traction in India, unlike in more mature markets. Zepto competes with established rivals like Blinkit and Swiggy Instamart, demonstrating impressive execution capabilities.
This latest round consists of primary capital, meaning the funds are invested in exchange for equity. Zepto’s valuation has risen from $4.6 billion during initial discussions to $5 billion, with total funding now surpassing $1.6 billion, including $1 billion raised in the past two months alone.
Investors are eager to pour money into Zepto, seeing the opportunity in the fast-growing space. General Catalyst’s investment in Zepto marks its first since merging with Venture Highway in India, while Mars Growth continues to expand its presence in the Indian startup ecosystem, which is the third-largest in the world.
Zepto’s $1.2 billion gross merchandise value (GMV) highlights its competitive stance against giants like Zomato, Swiggy, Walmart, Reliance, and the Tatas. The competitive intensity is increasing as Flipkart enters the quick commerce market with Flipkart Minutes.
The quick commerce sector, now a $5 billion market, has become essential, impacting traditional e-commerce and modern retail. However, this growth often comes at the expense of mom-and-pop (kirana) stores. Investors note that players like Blinkit, Swiggy Instamart, and Zepto avoid admitting this to prevent upsetting kirana owners, a significant vote bank for the government.
Reflecting on the company’s journey, Palicha likened Zepto’s current position to Amazon’s early days, expressing confidence in the company’s potential for significant growth. “We are sitting on the right macro and the right business model to create something very large. If we execute well, we could achieve a $50-80 billion outcome,” he said at Startup Conclave in Bengaluru on August 9. “It’s largely about execution. There were companies in the past with similar potential but failed to execute.”
Zepto’s strategic moves and successful fundraising efforts position it as a significant player in India’s quick commerce and finance markets.
