With $665 million banked as part of its Series F funding round, Zepto has won big for the whole quick commerce sector—a strong vote of confidence from investors in the business model and growth trajectory of the startup. Avenir, Lightspeed, and Avra were among the new participating investors, while Glade Brook, Nexus, and StepStone were the returning ones. Of particular interest, Avra’s investment marked the first for Anu Hariharan’s growth equity fund.
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Zepto would use the capital to fight back at competitors such as BlinkIt and Swiggy Instamart. Far from mere competition against other players, the company is fretting more over building a more sustainable strategy to ensure growth in the very competitive quick commerce space of India. What sets it apart from Western markets are different consumer behaviors and other logistics challenges that are unique to India.
According to its statement, the startup is close to EBITDA positivity while displaying an incredible growth of 140% YoY and $1 billion Plus annualized gross merchandise value. As of May 2024, 75% of Zepto’s stores are fully EBITDA positive, reflecting its efficient operation model.
However, with the founder- duo of Stanford dropouts Aadit Palicha and Kaivalya Vohra, Zepto has seen rapid ascendance in quick commerce since 2021. The cofounders have iterated that this funding round is a sort of strategic pre-IPO financing effort. He added that the capital infusion shall further strengthen Zepto’s balance sheet in a big-ticket IPO, thereby underscoring how prepared the firm is for scale.
Notably, Avra Capital’s participation in this round represents its first global investment with Zepto. This goes on to show the heavy confidence that investors have in the business model and growth potential of Zepto. Other investors, including Goodwater and Lachy Groom, have doubled their stakes, indicating there is still much support from existing investors in the business.
The funding round of Zepto has come at a point in time when India’s quick commerce sector is heating up. Walmart-owned Flipkart is set to launch a quick commerce service, adding one more heavyweight contender to this race.
Zepto’s latest fundraise underscores the rapid evolution and investor optimism in the quick commerce industry in India. Using the freshly raised capital strategically, Zepto is very well-positioned to build scale, drive sustainable growth, and prepare for a major IPO. The event helped consolidate only Zepto’s position as a strong contender in the quick commerce space but has also set the stage for a very exciting phase of growth and scale in the upcoming years.
