Zepto has raised $350 million in new funding, its third funding round in six months, as the Indian fast-commerce startup strengthens its position against rivals ahead of a planned IPO next year.
Indian family offices, wealthy individuals, and asset manager Motilal Oswal invested in the round, which keeps Zepto’s valuation at $5 billion. Motilal founder Raamdeo Agrawal, the family offices of Mankind Pharma, RP-Sanjiv Goenka, Cello, Haldiram’s, Sekhsaria, and Kalyan, and celebrities Amitabh Bachchan and Sachin Tendulkar are among the backers of the new, largest-ever investment. the first domestic round in India.
The funding comes as Zepto rushes to add Indian investors to its table cap, with foreign ownership currently accounting for two-thirds. TechCrunch first reported on the talks for a new round last month. The Mumbai-headquartered startup has now raised more than $1.35 billion since June.
Quick retail — delivering groceries and other items to customers’ doorsteps in 10 minutes — in India is expected to cross $6 billion this year. Morgan Stanley projects the market to be worth $42 billion by 2030, representing 18.4% of total e-commerce and 2.5% of retail sales. These strong growth prospects have forced established players, including Flipkart, Myntra, and Nykaa, to reduce delivery times as they lose business to specialty delivery apps.
Even though fast-paced commerce hasn’t caught on in many pockets of the world, the model seems to be working particularly well in India, where informal stores still exist.
Instant trading platforms are creating “similar trades for convenience-seeking clients” in India, Morgan Stanley wrote in a note this month.
Zepto and its rivals – Zomato-owned Blinkit, Swiggy-owned Instamart, and Tata-owned BigBasket – currently operate at lower margins than traditional retailers, and Morgan Stanley expects the market leaders to achieve higher contribution margins. of 7% to 8% and adjusted EBITDA margins. more than 5% by 2030. (Zepto currently spends about $35 million a month, according to multiple people familiar with the figure.)
Zepto, which delivers more than 7 million orders in more than 17 cities every day, is on track to record annual sales of $2 billion, according to an investor presentation reviewed by TechCrunch. It is targeting 150% growth in the next 12 months, CEO Aadit Palicha told investors in August. The startup plans to go public in India next year.
However, the rapid growth of fast-paced commerce has had a negative impact on the mom-and-pop shops that populate thousands of cities, towns and villages in India.
About 200,000 neighborhood stores have closed in the past year, while 90,000 stores have closed in big cities where fast-moving retail is more common, according to the All India Consumer Products Distributors Federation.
The coalition warns that without regulatory intervention, many neighborhood stores face closure as fast-paced commerce prioritizes growth over sustainable practices.
Zepto said it has created job opportunities for hundreds of thousands of gig workers. “From day one, our vision has been to play a small role in nation building, create more jobs, and provide better services to Indian consumers,” Palicha said in a statement.
Regulatory challenges are looming. Unless an e-commerce company is majority owned by an Indian company or individual, current laws prevent it from using the inventory model. Faster firms do not currently comply with these rules.
