Zepto plans to raise $650 million at a valuation of $3.5 billion: Report

Grocery delivery startup Zepto is planning to raise $650 million at a valuation of $3.5 billion from existing and new investors, reported Moneycontrol. As per the report, the existing investors include StepStone Group, Nexus Venture Partners and Glade Brook Capital, while the new investors would be Avenir Growth, Lightspeed Venture Partners, DST Global and Avra.

This fundraise comes even as many startups are suffering from funding winter that hit the Indian startup ecosystem in late 2022

Zepto's fundraising plans

As per Moneycontrol, this fresh fund raising round will more than double Zepto's valuation from $1.4 billion to $3.5 billion as investors remain bullish on the company growth potential in the quick commerce segment. The report further mentioned that Nexus and its LP (limited partner) StepStone will together lead the round by putting in a majority of the total $650 million

This fundraising will be the second round for Zepto within a year's time. In August 2023, the startup raised $231 million, from StepStone Group, Goodwater Capital and other investors at a valuation of $1.4 billion.

Quick commerce companies in India

This investment by Nexus will be the largest investment ever. The big bet on Zepto comes as it is the only pure play quick commerce company among the lot which is in the need to set itself apart from the rest. To achieve this, Zomato requires faster growth with a deep pool of capital.

Zepto's rivals are large players including Zomato-owned Blinkit, Swiggy Instamart and Tata’s BigBasket. All of this are working to become the top player in the space. Gurugram-based Blinkit is currently the largest quick commerce company with a market share of about 40-45%, as per several estimates. Meanwhile Zomato and Swiggy have a thriving food delivery business, BigBasket is owned by the Tata group.

The Moneycontrol report quoting Goldman Sachs said that while quick commerce has struggled globally, it has emerged as a $5-billion annual sales channel in India and will only grow further. As per Goldman Sachs, Zepto does 5.5 lakh orders a day through a network of 340 dark stores across seven cities in India while its annualised Gross Order Value stands at $1.2 billion and has a take rate of 23%.

Meanwhile, Blinkit delivered over 7 lakh orders each day and had 526 dark stores during the January-March period. Blinkit had a take rate of around 19%.

Take rate is what the company earns from brands on each sale.

Also watch: Zepto's stake sale deal with Flipkart falls through with no chance of revival: Report