Zepto, the fast-growing quick-commerce company, is set to raise an additional $310 million in a new funding round that will push its valuation to $5 billion, marking a 40% increase from its previous round just over a month ago. This latest infusion will bring Zepto’s total funds raised to nearly $1 billion across two consecutive rounds, highlighting the escalating demand for rapid delivery services.
In late June, Zepto secured $665 million from a group of investors, more than doubling its valuation from $1.4 billion in August 2023 to $3.6 billion. The company has experienced a remarkable three-and-a-half-fold increase in valuation over the past year, driven by the surging appetite for quick commerce.
The upcoming round will see participation from Mars Growth Capital, a joint venture between Mitsubishi UFJ Financial Group Inc and Israel’s Liquidity Group. Mars Growth will be joined by US-based General Catalyst and other existing investors of the Mumbai-based firm. Sources familiar with the deal revealed that a term sheet has already been signed, setting the stage for the round to close within the next few weeks.
Mars Growth is expected to contribute around $50 million to the round, while General Catalyst will invest approximately $200 million, with the remaining funds coming from other investors. The round may expand to $350 million, but under the terms of the agreement, Zepto is restricted from raising more than $350 million within 90 days of the previous round to protect existing investors from dilution.
Neeraj Arora of General Catalyst, who joined the firm after the acquisition of Venture Highway, will take a seat on Zepto’s board as part of this round. Arora, known for his role as the former Chief Business Officer of WhatsApp, adds significant experience to Zepto’s leadership as it eyes further growth.
This fresh capital will provide Zepto with the resources to compete aggressively against larger rivals like Blinkit, Swiggy Instamart, and new entrant Flipkart Minutes. Blinkit, owned by Zomato, has been valued at $12-13 billion by global brokerages following a strong June-quarter performance. Blinkit is also on track to expand to 2,000 dark stores by 2026, while Zepto plans to have 700 dark stores by March 2025.
Zepto’s strategy includes opening larger stores, increasing their size from 3,500 to 4,000 square feet, and expanding its product offerings from 3,000 to 10,000 stock-keeping units (SKUs). This expansion reflects Zepto’s ambition to diversify into categories traditionally dominated by e-commerce giants like Flipkart and Amazon, such as electronics, beauty products, and personal care items.
Founder Aadit Palicha, a 22-year-old Stanford dropout, along with his batchmate Kaivalya Vohra, has steered Zepto towards rapid growth, raising a total of $1.5 billion to date. The company, domiciled in Singapore, is considering moving its base to India as it prepares for an initial public offering (IPO) in the near term.
Palicha emphasized the importance of this latest funding round as a crucial step towards building a robust balance sheet ahead of the planned IPO, underscoring Zepto’s long-term vision to establish itself as a leader in the quick-commerce space.
