Zepto Raises $340 Mn In Follow-On Financing Round

SUMMARY

Led by General Catalyst, the funding round saw participation from new investors Dragon Fund and Epiq Capital and existing backers StepStone, Lightspeed, DST and Contrary

The fresh capital infusion will enable Zepto to strengthen its balance sheet as it continues to deliver “robust growth and operating leverage”

In June, the quick commerce major raised $665 Mn in its pre-IPO funding round at a valuation of $3.6 Bn, more than double from $1.4 Bn at which it was last valued

Quick commerce unicorn Zepto has raised $340 Mn (about INR 2,850 Cr) in a ‘follow-on financing’ round, led by General Catalyst, at a valuation of $5 Bn.

The round also saw participation from new investors Dragon Fund and Epiq Capital, as well existing backers StepStone, Lightspeed, DST and Contrary.

In a statement, Zepto cofounder and CEO Aadit Palicha said that the fresh capital infusion will enable the company to strengthen its balance sheet as it continues to deliver “robust growth and operating leverage”.

Speaking about the rationale behind the financing round, Palicha added, “First, the opportunity to bring on board a lead investor of Neeraj Arora’s calibre from General Catalyst was one we couldn’t pass on… While these recent financings reflect strong confidence in Zepto’s performance to date, we recognise there is still a lot of execution ahead of us to fulfil our ambition of building a world-class internet company out of India. At Zepto, we genuinely feel we are just at the beginning of our journey.”

With this, Zepto has raised more than $1 Bn in a span of about three months. In June, the quick commerce major raised $665 Mn in its pre-IPO funding round at a valuation of $3.6 Bn, more than double from $1.4 Bn at which it was last pegged.

The fundraise is expected to heat up the competition in India’s burgeoning quick commerce space. Recently, Flipkart and BigBasket forayed into the “10-minute” delivery segment while another ecommerce juggernaut Amazon is planning its quick commerce as soon as early next year.

Notably, the deal also marks one of the first investments by General Catalyst since it acquired Venture Highway earlier this year. The consolidated entity has reportedly set its eyes on pumping $500 Mn to $1 Bn in early and growth-stage startups in the country.

Founded in 2021 by Palicha and Kaivalya Vohra, Zepto is a quick commerce startup that claims to offer 10-minute deliveries of groceries and other items. Last year, Zepto became the first unicorn of 2023 after raising $200 Mn in its Series E funding round.

It competes with the likes of Zomato-owned Blinkit, Swiggy Instamart, recently launched Flipkart Minutes, and Tata-owned BigBasket.

The latest fundraise comes at a time when Zepto is reportedly gearing up for an initial public offering (IPO) next year. Earlier this year, Inc42 reported that the quick commerce unicorn was looking to reverse flip to India by 2026.

Zepto saw its operating revenue surge 14.3X to INR 2,024.3 Cr in the financial year 2022-23 (FY23) from INR 140.7 Cr in the previous fiscal. Meanwhile, net loss jumped 3.4X year-on-year (YoY) to INR 1,272.4 Cr during the year under review.

Notably, Palicha recently, as per TechCrunch. told a group of analysts and investors internally that the startup anticipates a growth of 150% in the next 12 months.