Grocery delivery unicorn Zepto raises $340 million at $5 billion valuation, IPO soon?

Quick commerce major Zepto has raised $340 million in a funding round at a valuation of $5 billion.

The latest investment was led by General Catalyst, with Dragon Fund and Epiq Capital joining as new investors. Existing investors, including StepStone, Lightspeed, DST, and Contrary, also participated.

Secured over $1 billion in just three months

Notably, the three-year-old startup has secured over $1 billion in funding over the past three months. In June 2024, Zepto raised $665 million, which boosted its valuation from $1.4 billion to $3.6 billion.

Glade Brook, Nexus, and StepStone Group co-led that Series F round.

CEO Palicha explains the reason behind raising funding

Zepto co-founder and CEO Aadit Palicha explained that the rationale behind raising fresh funding was twofold. “First, the opportunity to take on board a lead investor of Neeraj Arora’s calibre from General Catalyst was one we couldn’t pass on."

“Second, strengthening our balance sheet is a strategic move, particularly as the company continues to deliver robust growth and operating leverage. While (the) recent financing reflects strong confidence in Zepto’s performance to date, we recognise there is still a lot of execution ahead of us to fulfil our ambition of building a world-class internet company out of India,” Palicha said.

Palicha, whose net worth has now reached Rs 4,300 crore, said the latest investment will help Zepto strengthen its balance sheet ahead of its planned IPO in approximately 12 months.

“I’ve known Aadit and Kaivalya for several years, and they are truly exceptional founders who turned their bold mission to modernise India’s grocery sector into a category-defining company...having personally witnessed their bold vision and unmatched execution with Zepto since their inception in 2020,” said Neeraj Arora, Managing Director, General Catalyst.

“The young founders possess a rare combination of 'out of the box' systems thinking and a mission that has attracted the best industry talent. Their long-term vision to reimagine and build an enduring supply-chain company front-ends as a quick commerce play today," he added.

Achieving unicorn status

In August last year, Zepto joined the unicorn startup club after raising $200 million in a Series E funding round at a valuation of $1.4 billion.

The new Series E round was led by StepStone Group, with participation from Goodwater Capital and existing investors —Nexus Venture Partners, Glade Brook Capital, and Lachy Groom, among others.

Zepto's market presence

Founded in 2021 by Stanford dropouts Kaivalya Vohra and Aadit Palicha, Zepto operates in the highly competitive quick commerce market, delivering groceries, household items, and electronic accessories to urban Indian consumers within 10-15 minutes. 

The startup uses a network of "dark stores"—small warehouses located close to high-demand areas. This allows the three-year-old startup to ensure swift delivery times.

Currently, It has over 50,000 delivery partners, adding about 5,000 new partners each month, and plans to expand its dark store network to 700 by March 2025.

Zepto currently has around 350 dark stores in 10 cities, including Bengaluru, Chennai, Delhi, Ghaziabad, Gurgaon, Hyderabad, Kolkata, Mumbai, Noida, and Pune.

According to HSBC, the unicorn had a 28% market share as of January 2024, up from 15% in March 2022. Blinkit had a 40% market share as of January, and Instamart had 32%.