Zepto raises $340M at a $5B valuation as India's quick-commerce market heats up

Indian instant delivery startup Zepto has finalized a $340 million round that values it at $5 billion, up from $3.6 billion in June and $1.4 billion last August, as the startup races to win market share in India’s contested quick-commerce market.

General Catalyst and Mars Growth Capital are co-leading the Series G round, which will be closed within a few days, sources familiar with the deal told TechCrunch. The round values Zepto, which delivers everything from grocery to electronics in minutes, at $4.6 billion pre-money, which comes to about $5 billion after the investment, according to a term sheet seen by TechCrunch. 

With this new round, Zepto has raised nearly $1 billion in fresh funding this year.

The startup has been on a tear lately, competing with Blinkit (owned by Zomato) and Swiggy’s Instamart in India’s burgeoning quick-commerce market, which is beginning to chip away market share from traditional e-commerce giants like Amazon.

Zepto is on track to generate more than $1.5 billion in annualized sales, a source familiar with the matter told TechCrunch. Blinkit is currently on track to see about $2 billion annualized sales this year, according to its parent company Zomato’s quarterly results statement.

Zepto declined to comment.

Retail is a $1.1 trillion market in India, but much of it is unorganized and served by small, family-owned businesses that run corner shops. Reliance Retail, which operates the nation’s largest retail chain, is valued at about $100 billion. “This is why any time a new model shows semblance of traction in India retail, investors greatly reward it,” an investor in the space told TechCrunch, requesting anonymity.

Indian news outlet Economic Times first reported Mars Growth’s involvement in Zepto’s new round. The Information earlier reported that General Catalyst was in talks with Zepto.

Quick-commerce services like Zepto are used widely in urban India, and they manage to fulfill orders quickly by using numerous discrete warehouses, known as “dark stores.” By strategically locating these facilities within a few miles of high-demand residential and commercial areas, they can fulfill orders within minutes.

The strong traction enjoyed by quick-commerce firms in India, a $4 trillion economy, has surprised investors and analysts across the world, because many similar business models have failed in other, more developed markets like the U.S. or Europe. Getir shut its quick-commerce operations in the U.S., the U.K. and Europe earlier this year.

This rapid expansion has also caught some established e-commerce players off guard, with analysts suggesting that companies like Amazon have been slow to adapt to changing consumer habits in India.

Quick-commerce companies are altogether on track to generate revenue of $4.5 billion to $5 billion in India this year, compared to Amazon India’s $18 billion, according to estimates by brokerage firm JM Financial. Amazon has been operating in India for about 10 years and has invested more than $7 billion in its e-commerce business in the country.

Market analysts feel Amazon hasn’t been strategic enough in India. “Founders — whether it’s Deepinder (Zomato), Aadit (Zepto), or Vidit (Meesho) or the team at Flipkart — have out-executed the management team [of Amazon],” Bernstein analyst Rahul Malhotra told TechCrunch earlier this month. Flipkart recently launched its quick-commerce offering in parts of Bangalore.

Zepto is planning to expand its network of dark stores to over 700 by March 2025. The startup, which also counts Nexus, Lightspeed, Avra and StepStone among its backers, said in June that its revenue had increased 140% compared with a year earlier. It said at the time that it works with more than 50,000 delivery partners and is adding more than 5,000 delivery partners each month.

In June, Zepto said that about 75% of its dark stores were EBITDA-positive as of May. Improved efficiency and scale mean that a dark store that previously took 23 months to achieve profitability now reaches that milestone in six months, the startup said at the time.

Zepto currently operates in large Indian cities and plans to expand to a few smaller cities in the coming months.

According to Goldman Sachs, the total addressable market in the grocery and non-grocery categories for quick-commerce companies in the top 40-50 Indian cities is about $150 billion.