Zepto raises another $350 million in third fundraise in six months | Company Business News

Bengaluru: Quick commerce company Zepto has secured another $350 million in a funding round led by Motilal Oswal’s private wealth division, making it the firm’s third capital raise in six months. The round included investments from Indian high net-worth individuals (HNIs), family offices, and financial institutions, marking the largest 100% domestic fundraising in India’s startup ecosystem.

Prominent investors in this round include Mankind Pharma Family Office, RP Sanjiv Goenka Group, Cello Family Office, Haldiram Snacks Family Office, and actor Abhishek Bachchan and cricket icon Sachin Tendulkar, the firm said in a statement late Thursday evening.

mint reported on Zepto’s fundraising last week, noting that the round is likely to be a flat valuation of $5 billion.

The Mumbai-based company has raced its way to bag some of the biggest funding rounds so far this year. It is reshaping India’s e-commerce sector, forcing giants like Walmart-backed Flipkart and Tata’s BigBasket to venture into instant deliveries.

This comes just three months after the Aadit Palicha-led company raised follow-on financing of $340 million led by US-based venture capital firm General Catalyst, making its valuation shoot up to $5 billion. New investors Dragon Fund and Epiq Capital joined the round, while existing investors StepStone, Lightspeed, DST and Contrary increased their stakes.

In June, Zepto secured $665 million in a pre-IPO round at a valuation of $3.6 billion.

“When we started this venture, the risk appetite among domestic investors was limited—especially to trust 18-year-olds with their money. Today, we are humbled to have reached a place in India’s economic growth where we’ve not only fostered that trust but also spearheaded a fundraise of this magnitude, which will hopefully set a precedent for the startups that follow,” Aadit Palicha, co- founder and CEO of Zepto, said.

Zepto, which is gearing up for a public market listing next year, gained its coveted unicorn status a year ago, when it raised $200 million at a valuation of $1.4 billion.

Quick commerce market

India’s quick-commerce market grew 77% in 2023 to reach $2.8 billion in gross merchandise value (GMV), accounting for 5% of India’s overall e-commerce market, according to consulting firm Redseer.

GMV, a key metric in e-commerce, tracks the total value of all the goods sold on a platform, not including discounts and other expenses.

Palicha and Kaivalya Vohra founded Zepto in April 2021, when covid curfews had made people in India’s large cities accustomed to buying daily staples online. The four-year-old startup is now gearing up for an initial public offering of its shares next year, aiming for a multi-billion-dollar listing, Palicha told mint in June.

Over the past few months, Zepto, Blinkit and Swiggy’s Instamart have fueled demand for instant deliveries, growing their network of dark stores and expanding their range of products. Zepto said it plans to use the capital to double the number of its dark stores, or warehouses, to 700 by March 2025.

Blinkit, which Zomato acquired in June 2022, commands a 40% share of India’s quick-commerce market, according to an HSBC Global Research report in April. Zepto has steadily increased its share to 28% at the cost of Swiggy Instamart over the past two years, it said. Swiggy is preparing for a listing in the coming week.

Nearly 75% of Zepto’s 350 stores are Ebitda-positive (or operationally profitable), CEO Aadit Palicha told. mint in an interview in June, adding that the company has shrunk the time it needs for its dark stores to become profitable from nearly two years to six months.

He added that Zepto is also nearly EBITDA-positive at the company level. The startup also reinvests proceeds from its profitable stores back into the business.

“Motilal Oswal is a strong believer in the future of digital businesses, particularly quick commerce players like Zepto, as potential free cash flow powerhouses. India’s biggest and marquee family office clients of Motilal Oswal Private Wealth share this excitement and have participated in this once-in-a-lifetime journey of value creation,” said Ashish Shanker, managing director and chief executive officer of Motilal Oswal Pvt. Wealth, said.