Quick commerce firm Zepto is set to raise around $340 million in a new funding round that will it at $5 billion, sources said.This means that Zepto’s total funding will cross the $1.6 billion-mark, with $1 billion raised in just the last two months. The company’s valuation has surged from $1.4 billion in August last year, to $5 billion now, which is a three-fold jump in just a year.
According to sources, while Zepto was initially preparing to raise around $400 million, it decided to cap the size at $340 million. Of this, $250 million will come from General Catalyst, while Mars Growth will bring in $50 million. The remaining amount will come from existing backers.
The latest round of funding comes close after it closed a $665 million round. The new round will consist of primary capital and will be all equity. Zepto and Mars Growth did not respond to queries on the subject.
For Mars Growth, this will be yet another investment in the Indian startup ecosystem. It already backs large companies like Zetwerk and Meesho in India. For General Catalyst, on the other hand, investment in Zepto will be its first since deepening its India presence by merging with Venture Highway in India.
Zepto currently enjoys a market share of around 28%, as per an HSBC report, while Blinkit leads the market with a near 40% share and Instamart’s market share has declined to around 32%.
Both Instamart and current market leader Blinkit operate in 25-30 cities across India, while Zepto is present only in 10 cities. If only metros are considered, Zepto has the second-highest market share of 32%, after Blinkit at 37%.
Zepto has seen a rapid rise in its gross merchandise volume (GMV) over three years and currently has a GMV run-rate of $1.2 billion, doubling every year. Meanwhile, its sales have crossed Rs 2,000 crore in FY23. However, concerns around its burgeoning losses remain. In FY23, it had posted losses of Rs 1,272 crore.
“Our stores are turning profitable faster, while we are achieving near positive Ebitda at a company level. We plan to continue operating with fiscal discipline as we scale from 350 stores to 700 stores by reinvesting the capital generated from mature stores back into the business,” Palicha had told Fe after the last fund raise.
“If we are able to achieve this while continuing to delight customers, I believe we will be ready to go public relatively soon,” he had said.
“We don’t see ourselves drastically changing our models to accommodate for very large sized items. We don’t have the intention of delivering refrigerators, or television screens, at least as things stand,” Palicha had added.