Indian grocery startup Zepto said on Friday it has raised $665 million in an investment round, in less than a year of its last fundraising, underscoring the high demand for services that deliver essentials within minutes.
Three-year old Zepto was valued at $3.6 billion, a sharp increase from the $1.4 billion valuation it had in August.
The latest round saw participation from New York-based Avenir Growth Capital and Lightspeed Venture Partners as well as a maiden investment from Avra Capital — a fund launched by former Y Combinator and Andreessen Horowitz investor Anu Hariharan. Some existing investors also participated.
The deal adds heft to Zepto’s balance sheet as it competes with Zomato-owned ZOMT.NS Blinkit and Swiggy’s Instamart in a highly competitive market marred by high investments and thin margins. Flipkart is also reportedly preparing to enter into the quick commerce space.
Indian customers are increasingly adopting quick commerce services, which have recently expanded beyond groceries to sell mobile phones, tech accessories and gifting items, giving competition to e-commerce giants such as Amazon.com AMZN.O and Walmart-owned WMT.N Flipkart and squeezing the neighborhood mom-and-pop stores.
Goldman Sachs had said in April quick deliveries account for $5 billion, or 45% of India’s $11 billion online grocery market and are set to expand to $60 billion, or 70%, by 2030.
Zepto Co-Founder and CEO Aadit Palicha said the company would use the funds to double the count of its dark stores, or warehouses located in high-demand neighborhoods that ship goods, to over 700 by March 2025.
The company’s gross merchandise value, or the value of total transactions through the platform, has “multiplied year-on-year to a base of $1 billion+” and over 75% of its dark stores are profitable at a core operating level, he said.
Zepto had a 28% market share as of January 2024, up from 15% in March 2022, according to HSBC. Blinkit had a 40% market share as of January and Instamart had 32%.
Reuters
