Quick commerce unicorn Zepto is planning to raise $650 million in a pre-IPO round, co-led by existing investors Nexus Venture Partners and US-based Glade Brook Capital, according to sources familiar with the matter. The new round will give the startup a post-money valuation of $3.5 billion, up from its pre-money valuation of $2.9 billion.
Sources added that existing investors are putting in most of the capital, while new investors such as DST Global, Avra and New York-based Avenir Growth are also participating in this round. The fund will be largely used to expand Zepto’s presence to new cities and penetrate deeper into the existing ones.
This is by far the largest funding round for an Indian startup this year, at a time when the industry continues to see a muted number of deals and smaller cheque sizes for growth-stage companies. Less than a year ago, in August, Zepto had raised $200 million at a $1.4 billion valuation in a Series E round led by US asset management firm StepStone Group.
Zepto had earlier mentioned plans to go public in 2025, after it achieves profitability, but no definite announcement has been made so far. Sources added that this fundraise will primarily be a pre-IPO round, post which the company will look to solidify its listing plans.
Founded by Aadit Palicha and Kaivalya Vohra during the covid pandemic, Zepto is one of three primary players in India’s booming quick commerce market. Unlike its rivals Blinkit, owned by Zomato, and Instamart, owned by Swiggy, Zepto is the only pure-play quick commerce platform and has presence in Delhi, Chennai, Gurgaon, Bangalore, Mumbai and Hyderabad.
Zepto currently enjoys a market share of 28%, as per a recent HSBC report, while Blinkit leads the market with a near 40% share and Instamart’s market share has declined to 32% as of January this year, from 36% last year and 52% in 2022.
To be sure, both Instamart and current market-leader Blinkit operate in 25-30 cities across India, while Zepto is only present in 10 metro 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.