In a major boost to India’s quick commerce sector, Zepto, the instant grocery delivery startup, is set to secure approximately $650 million from a mix of existing and new investors. This funding round is expected to elevate Zepto’s valuation to an impressive $3.5 billion, reflecting a significant leap from its previous $1.4 billion valuation in August 2023.
Leading this funding round are existing investors such as StepStone Group, Nexus Venture Partners, and Glade Brook Capital, joined by new investors including Avenir Growth, Lightspeed Venture Partners, DST Global, and Avra. StepStone Group and Nexus Venture Partners are at the forefront of this round, contributing a majority of the funds.
The remarkable increase in Zepto’s valuation underscores the robust market position and strategic direction of the company. Since its inception, Zepto has seen a meteoric rise in its valuation from $250 million in 2021, to $900 million in 2022, and $1.4 billion in 2023. The current funding round will more than double its valuation, showcasing strong investor confidence.
Zepto operates in a fiercely competitive market, facing rivals like Blinkit (owned by Zomato), Swiggy Instamart, and Tata’s BigBasket (BB Now). Currently, Blinkit holds the largest market share in the quick commerce sector with 40-45%, but Zepto is catching up swiftly.
Zepto’s operational metrics are impressive, with the company handling 550,000 orders daily through 340 dark stores across seven Indian cities. The company’s annualized gross order value stands at $1.2 billion, with a take rate of 23%. In comparison, Blinkit processes over 700,000 orders per day through 526 dark stores, with a take rate of 19%.
Unlike its competitors, Zepto is focused exclusively on quick commerce, which requires rapid growth and substantial capital investment to stay competitive. This focus has driven its need for substantial funding to differentiate itself and capture more market share.
The new funding will help Zepto bolster its competitive stance against larger players and continue its growth trajectory. The company aims to achieve EBITDA breakeven by September 2024 and reduce its cash burn to single-digit millions.
The quick commerce sector in India has evolved into a $5-billion annual sales channel, according to Goldman Sachs. Zepto’s substantial market share and operational efficiency position it well to capitalize on this growing market.