New Delhi: Zepto, a Mumbai-based 10-minute delivery app, has raised an impressive $665 million in a Series F funding round, boosting its valuation to $3.6 billion from $1.4 billion within a year. This funding round, which was “highly oversubscribed,” was co-led by Glade Brook, Nexus, and StepStone Group, with participation from Avenir, Lightspeed, and Avra, as well as existing investors Goodwater, Lachy Groom, and Contrary. DST Global, an early investor in Swiggy, a competitor of Zepto, also co-led the round, though Zepto did not confirm this participation.
Zepto operates in the quick commerce sector, delivering a range of products from groceries to electronics in urban Indian areas within a short time frame. Despite the collapse of similar models in developed markets, quick commerce is thriving in India. Zepto competes with BlinkIt (owned by Zomato) and Swiggy’s Instamart, utilizing a network of strategically placed “dark stores” in high-demand areas to ensure rapid delivery times.
Will Robbins, a partner at Contrary, highlighted that dark stores require less space than traditional storefronts, enabling Zepto to establish a dense network across cities. Zepto plans to expand its dark store network to over 700 by March 2025. The company’s revenue has increased by 140% over the past year, with its annualized gross merchandise value (GMV) expected to surpass $1 billion. Zepto currently works with over 50,000 delivery partners and is adding more than 5,000 new partners each month. About 75% of its dark stores were EBITDA positive as of last month, with improved efficiencies reducing the time to profitability from 23 months to six months.
Zepto’s rapid growth in India, a $4 trillion economy, has surprised many investors and analysts. Co-founder and CEO Aadit Palicha attributes this success to India’s culture of hyper-local shopping, where consumers frequently purchase small-ticket items. This model offers convenience and speed unmatched by traditional grocery formats.
Expanding beyond groceries, some quick commerce firms in India now deliver high-ticket items like smartphones and gaming consoles within minutes. However, Zepto focuses on lower-stake purchases such as household appliances, undergarments, general merchandise, toys, beauty and cosmetics, and home and kitchen products. The company operates in major Indian cities and plans to expand into smaller cities soon, encouraged by the positive response from places like Jaipur.
Avenir, a New York-based venture firm, had been monitoring Zepto for about three years before investing. Partner Ben Jubas believes Zepto has the potential to become a major commerce business due to its strong value proposition and operational discipline. Industry analysts suggest that quick commerce could significantly challenge major e-commerce players like Amazon and Flipkart. Goldman Sachs estimates the total addressable market for quick commerce in the top 40-50 cities to be around $150 billion.
Palicha expressed confidence in Zepto’s future, stating that if the company continues to delight customers, it will be ready to go public soon.
