In what is a huge win for the fast-commerce space, fast-growing start-up Zepto, founded by Aadit Palicha and Kaivalya Vohra, has now raised USD 340 million in a new funding round that elevates the firm’s valuation to an overwhelming USD 5 billion. This fundraise is entirely primary in nature and comes right as a definitive moment for Zepto in re-asserting a very strong business model and growth potential in a hyper-competitive quick commerce market.
PC: The Economic Times
A $250 million cheque was cut by General Catalyst, and $50 million more came from Mars Growth. The balance came from other existing investors who still believed in the direction Zepto was taking and its market potential. Originally, Zepto intended to raise $400 million but judiciously closed the round at $340 million to drive capital efficiency and shareholder value.
According to a media report, co-founder of Zepto, Aadit Palicha is sanguine about the growth trajectory and draws comparisons with Amazon, very much at a similar phase of growth. “We are where Amazon was in the late 90s, early 2000s. We are sitting on the right macro and the right business model to create something that is very large. And if we execute well, we are sitting on a $50-80 billion outcome,” Mr. Palicha said, pointing to the many opportunities that lie ahead for Zepto.
Fast commerce, including fast delivery of a range of products from groceries to electronics, forms the middle of this all. According to sources, this benefited from the demand surge in general, with Zepto absolutely at the top of the queue. The valuation surged to $5 billion in August 2024 from $1.6 billion in August 2023, propelled by the strong market position and growth trajectory.
The quick commerce market of India will grow by approximately 35 per cent to almost $7 billion in gross merchandise value, according to Datum Intelligence. With this kind of growth trajectory, Zepto is well-positioned in a market where it faces stiff competition from the likes of Blinkit and Swiggy-Instamart.
Their strategic investments in this round underscore the potential that General Catalyst and Mars Growth see in harnessing the power of the burgeoning Indian startup ecosystem, currently ranking third globally. Mars Growth is continuing to raise its bets on the market’s prospects, following earlier investments into home-grown companies like Zetwerk and Meesho. General Catalyst, following its merger with Venture Highway, said the strategic investment in Zepto was deepening its footprint in India.
The fresh capital infusion will be instrumental in fuelling Zepto’s next phase of growth as the company aggressively scales operations and services. The strong market presence and its unique business model can be leveraged to get a sizable market share of the growing quick commerce market.
To sum up, the successful funding round of Zepto and an increased valuation set a tone for it becoming one of the category leaders in quick commerce. With strategic backing from some marquee investors and a well-defined growth vision, Zepto is going to create some amazing milestones in the coming years, thus further cements its place in the vibrant Indian start-up landscape.
