Zepto raises $450M, boosting its valuation to $7B as it ramps up competition in India’s rapid commerce market.

Zepto, a quick commerce company, said on October 16 that it has secured around $450 million (about Rs 4,000 crore) in a new round headed by the California Public Employees’ Retirement System (Calpers), a US-based pension fund, and General Catalyst, a previous investor. The round now puts Zepto’s worth at $7 billion, which is more than double what it was at last year.

Avenir, Avra, Lightspeed, Glade Brook, The Stepstone Group, and Nexus Venture Partners, who are already investors in Zepto, also took part in this round.

Zepto is trying to get more involved in India’s $7 billion rapid commerce market by raising the stakes in this round, which is made up of both primary capital and secondary share sales. Zepto is now likely to be more of a rival to Blinkit, Swiggy’s Instamart, Tata’s BigBasket, Flipkart Minutes, and Amazon Now, all of which are owned by Eternal.

“This funding shows that our team has been able to grow the business quickly while also building up operating leverage.” “We now have about $900 million in net cash in the bank, which is more than enough for the future,” said Aadit Palicha, co-founder and CEO of Zepto.

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Zepto has $900 million (about Rs 7,900 crore) in cash, while Eternal has Rs 18,314 crore and Swiggy has about Rs 7,700 crore (Rs 5,354 crore in cash + Rs 2,400 crore in cash from selling its investment in Rapido).

Most of the $450 million came from secondary investors, but early investors sold their shares in the company to make room for new ones. Since it started in 2020, this is one of Zepto’s biggest rounds.

The company has now raised close to $3 billion, with over $2 billion of that coming in the last 18 months or so as it competes with bigger companies to become the market leader in the fast grocery industry.

“Zepto’s order volume grew by 200% over the past 18 months, and they were able to make more and more of their stores profitable even as they spent money on growth. “That performance, along with the $500B+ Indian Grocery opportunity, convinced us that Zepto is building a generational consumer internet company,” said Vivek Subramanian, Partner and Chief Product Officer at Goodwater Capital.

What is the structure of the funding round?

About $350 to $380 million of the $450 million will be primary financing that will go straight to Zepto. The rest, which is only about $70–100 million, will come via secondary share deals in which early investors sell shares to new investors, according to sources who spoke to Moneycontrol.

What is the current valuation of Zepto?

Zepto is currently worth $7 billion, which is 40% more than it was worth last year when it was worth $5 billion.

What happens to the level of competition in rapid commerce?

Zepto’s fundraising will probably bring back the level of competition that was observed in the rapid commerce sector 8–10 months ago.

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The rapid commerce sector has been slowing down in the last several months while other companies, like Eternal’s Blinkit and Swiggy’s Instamart, focused on making money. However, Zepto, which will have a lot of money, will try to make up for lost ground and invest more to get a bigger portion of the market.

Eternal’s Blinkit is the biggest player, but Swiggy’s Instamart and Zepto continuously switching places for second and third. One player gets ahead of the other by spending more on marketing.