Zepto Secures $340 Million at $5 Billion Valuation Ahead of IPO

Zepto, the quick-commerce leader, has just raised $340 million in a major funding round, boosting its valuation to $5 billion as it prepares for an initial public offering (IPO). This latest fundraising brings Zepto’s total capital raised in the past year to over $1 billion, marking its third significant funding event in 12 months.

Initially targeting $400 million, Zepto opted to secure $340 million to minimize equity dilution for existing investors. The funding round was spearheaded by General Catalyst, with Dragon Fund and Epiq Capital joining as new backers. Long-time investors such as StepStone, Lightspeed, DST, and Contrary also increased their stakes.

The funding comes as the quick commerce sector heats up in India. Competitors like Flipkart and BigBasket are entering the rapid delivery market, and Amazon is rumored to be exploring similar ventures.

Zepto co-founder and CEO Aadit Palicha highlighted the dual benefits of this round: attracting Neeraj Arora from General Catalyst and strengthening the company’s financial position amid strong growth and operational efficiency.

Recent reports show quick commerce is gaining traction. Zomato’s Blinkit, for instance, has outpaced its core food delivery business in growth metrics. Zepto’s gross merchandise value has soared to over $1 billion, and 75% of its stores are now EBITDA-positive as of May 2024.

This funding round follows Zepto’s impressive $665 million Series F raise in June, which doubled its valuation to $3.6 billion. The company had previously achieved unicorn status with a $235 million Series E round in August 2023 at a $1.4 billion valuation.

Neeraj Arora of General Catalyst praised Zepto’s quick commerce model, stating, “We are excited to support Zepto, as their innovative approach sets a new benchmark for e-commerce in India and beyond.”

With plans to expand its network of dark stores from 350 to 700 across 20 cities, Zepto aims to bolster its balance sheet and achieve profitability before its anticipated IPO in about a year.