B2C Expansion: Zepto Secures $340 Mn in Latest Funding Round

Funding Round Boosts B2C Ambitions

Quick commerce unicorn Zepto has raised $340 Mn (about INR 2,850 Cr) in a follow-on financing round, led by General Catalyst, with a new valuation of $5 Bn. The round witnessed participation from new investors Dragon Fund and Epiq Capital, alongside existing backers like StepStone, Lightspeed, DST, and Contrary.

Strategic Use of Fresh Capital

In a statement, Zepto co-founder and CEO Aadit Palicha emphasized that this funding will bolster the company’s balance sheet as it aims for robust growth and improved operating leverage. Addressing the strategic impetus for this financing round, he highlighted the significance of bringing onboard a lead investor of Neeraj Arora’s caliber from General Catalyst, expressing confidence in Zepto's performance and acknowledging the journey ahead to realize their vision of a premier internet company from India.

Competitive Landscape and Future Prospects

This round brings Zepto’s total funding to over $1 Bn within just three months. Earlier in June, the quick commerce major attracted $665 Mn in pre-IPO funding at a valuation of $3.6 Bn, more than doubling from its last assessment of $1.4 Bn. This rapid influx of capital is expected to intensify competition in India’s growing quick commerce sector.

Noteworthy competitors such as Flipkart and BigBasket have recently entered the 10-minute delivery market, alongside Amazon, which is gearing up to launch quick commerce services soon. The funding round also marks one of General Catalyst's initial investments following its acquisition of Venture Highway, with plans to invest significantly in early and growth-stage startups in India.

Zepto's Growth Trajectory

Founded in 2021 by Palicha and Kaivalya Vohra, Zepto aims to offer 10-minute deliveries for groceries. Last year, they emerged as the first unicorn of 2023, raising $200 Mn in their Series E funding. Zepto's latest fundraising occurs as they reportedly prepare for an initial public offering (IPO) next year, with potential plans for further expansion and financial recovery.

In the financial year 2022-23 (FY23), Zepto's operating revenue surged 14.3 times to INR 2,024.3 Cr, while their net loss increased 3.4 times year-on-year to INR 1,272.4 Cr. Palicha noted that the startup anticipates a growth of 150% over the next 12 months.