Zepto has finalized a $340 million round that increases its valuation to $5 billion, up from $3.6 billion in June and $1.4 billion in last August, as the startup races to win market share in India’s contested quick commerce market.
General Catalyst and Mars Growth Capital are co-leading the Series G round, which will complete all its formalities within a few days, according to people familiar with the matter. The round gives Zepto — which gives customers access to a range of categories, from grocery to electronics, that they can receive in minutes — a valuation of $4.6 billion pre-money, so about $5 billion following the funding, according to a term sheet seen by TechCrunch.
The new round means that three-year-old Zepto is closing in on $1 billion in fresh funding this year.
Zepto competes with BlinkIt (owned by Zomato) and Swiggy’s Instamart in India’s fast-growing quick commerce market, which is beginning to chip away market share from traditional e-commerce giants.
Zepto is on track to do more than $1.5 billion in annualized sales, according a source familiar with the matter. BlinkIt is currently at about $2 billion annualized GMV. Quick commerce companies, which all started operations just three years ago, will do a combined annual sales of $4.5 billion to $5 billion in India this year, compared to Amazon India’s $18 billion. Amazon has been operating in India for about 10 years and has invested more than $7 billion in its e-commerce business in the country.
Retail is a $1.1 trillion market in India, but much of it remains unorganised. Reliance Retail, which operates the nation’s largest retail chain, is valued at about $100 billion. “This is why any time a new model shows semblance of traction in India retail, investors greatly reward it,” an investor told TechCrunch.
Indian outlet Economic Times first reported about Mars Growth’s participation in Zepto’s new round. The Information earlier reported that General Catalyst was engaging with Zepto.
These quick commerce companies have established numerous discreet warehouses, known as “dark stores,” throughout urban India. By strategically locating these facilities within a few miles of high-demand residential and commercial areas, they can fulfill orders within minutes of purchase.
The growth of quick commerce firms in India, a $4 trillion economy, has surprised many investors and analysts, especially because many similar business models collapsed in other markets. This rapid expansion has also caught some established e-commerce players off guard, with analysts suggesting that companies like Amazon have been slow to adapt to changing consumer habits in India.
Amazon hasn’t been “strategic enough. And founders — whether it’s Deepinder (Zomato), Aadit (Zepto), or Vidit (Meesho) or the team at Flipkart — have out-executed the management team [of Amazon],” Bernstein analyst Rahul Malhotra told TechCrunch this month. Flipkart recently launched its quick commerce offering in parts of Bangalore.
Zepto aims to expand its network of dark stores to over 700 by March 2025. The startup, which also counts Nexus, Lightspeed, Avra and StepStone among its backers, said in June that its revenue had risen 140% from a year earlier. It works with more than 50,000 delivery partners and is adding over 5,000 delivery partners each month.
Zepto said earlier that about 75% of its dark stores were EBITDA positive as of last month. Improved efficiency and scale mean that a dark store that previously took 23 months to achieve profitability now reaches that milestone in six months, Zepto said in June.
Zepto currently operates in top Indian cities, and plans to expand to select smaller cities in the coming months.
According to Goldman Sachs, the total addressable market in the grocery and non-grocery categories for quick commerce companies in the top 40-50 cities is about $150 billion.
