Zepto Hits $7B Valuation with $450M Funding Amid Quick Commerce Boom
▼ Summary
– Zepto raised $400 million in a funding round led by CalPERS, with participation from existing investors, and plans to go public next year.
– The startup faces competition from quick commerce players like BlinkIt and Swiggy Instamart, as well as legacy e-commerce companies such as Flipkart and Amazon.
– Zepto has grown from 500,000 to 1.7 million daily orders in five quarters and is expanding its dark store network across over 80 cities in India.
– The quick commerce market in India is projected to reach up to $100 billion in a decade, with Zepto receiving nearly 20% of orders from smaller cities.
– CalPERS’ direct investment in Zepto signals strong institutional confidence in India’s rapid delivery sector and a shift in its venture strategy.
The Indian quick commerce sector is witnessing explosive growth, with startup Zepto securing a massive $400 million investment. This funding round, spearheaded by the California Public Employees’ Retirement System (CalPERS), propels the company’s valuation to an impressive $7 billion. A mix of primary and secondary investment, the round saw continued support from existing backers like Avenir, Avra, Lightspeed, Glade Brook, The Stepstone Group, and Nexus Venture Partners. With this fresh capital, Zepto is positioning itself for an initial public offering scheduled for next year.
Zepto operates in a fiercely competitive arena, going head-to-head with other quick delivery services such as BlinkIt (owned by Eternal, formerly Zomato), Swiggy Instamart, and Tata’s BigBasket. These rivals are all divisions of publicly listed parent companies. The startup has been on a remarkable fundraising trajectory, accumulating $1.3 billion in just a few months last year. Since Zepto’s previous funding round in November 2024, the competitive landscape has shifted significantly, with Swiggy making its stock market debut and BlinkIt reportedly surpassing Zomato in gross order value during the first quarter of 2025.
Beyond its direct quick commerce competitors, Zepto also contends with legacy e-commerce giants. Both Flipkart and Amazon have launched their own rapid delivery services, adding another layer of competition to the market.
The broader startup ecosystem is exploring verticalized e-commerce models. Companies like Accel-backed Swish and Zing are focusing on food delivery, while publicly listed Nykaa, Flipkart-owned Myntra, Silkk, and Blip aim to deliver apparel within an hour. Lightspeed-backed Snabbit offers home services like cleaning with a 10-minute booking promise, and startups such as FirstClub are taking a curated approach to grocery delivery.
Zepto’s leadership, including CEO Aadit Palicha, expresses strong confidence in the company’s expansion. Palicha revealed that daily orders have skyrocketed from 500,000 five quarters ago to 1.7 million daily orders, with expectations for this upward trend to continue. He emphasized that a key factor in securing this funding was the company’s success in making its dark stores profitable while simultaneously adding over 10 million new monthly transacting users. He noted that despite aggressive investments in customer acquisition and new store launches, the company maintained its focus on store-level profitability.
While Zepto, BlinkIt, and Instamart all compete across multiple categories, food delivery remains a primary battleground. Zepto did face a setback, temporarily pausing its Zepto Cafe service in 44 cities due to staffing issues. Although the company hasn’t specified how many locations have resumed operations, it confirmed that Zepto Cafe has achieved a run rate exceeding $110 million and is expanding quickly.
Market analysts are bullish on India’s quick commerce potential. Morgan Stanley projects the market could hit $42 billion by 2030, while Bernstein suggested in a March note that it might reach $100 billion within a decade. Bernstein also observed that in key markets, quick commerce has become the dominant method for purchasing groceries.
Zepto has primarily focused its service expansion on India’s major urban centers. According to a recent J.P. Morgan analysis, BlinkIt leads in geographic reach with dark stores in more than 204 cities, followed by Swiggy Instamart in over 104 cities, and Zepto operating in more than 80 cities across India. Zepto currently manages over 1,000 stores in these locations and intends to add several hundred more within the next twelve months. An interesting development is that while metro cities still generate the bulk of its business, nearly 20% of total order volume now comes from smaller cities.
The Zepto app showcases various offerings, including its Super Saver feature that provides extra discounts on large grocery orders, and highlights categories like electronics, fashion, and home decor. This extensive feature set has, however, resulted in a somewhat cluttered user interface. Palicha acknowledged this issue and confirmed that the company plans to redesign the app in the coming months to create a simpler, more intuitive experience.
CalPERS’s decision to lead this investment is particularly noteworthy. The pension fund traditionally accesses venture capital through intermediary funds rather than taking the lead on direct startup investments. Since 2022, CalPERS has been aggressively increasing its venture capital exposure, a move officials described as a correction after a “lost decade” of underperformance. The fund’s venture allocation has grown from approximately $800 million to a targeted $5 billion. Leading a funding round for an Indian quick-commerce startup signals robust institutional confidence in India’s rapid delivery sector and may also indicate CalPERS’s growing interest in direct venture investments within emerging markets. It is also notable that CalPERS is an investor in funds managed by some of Zepto’s existing backers, including Lightspeed and General Catalyst.
(Source: TechCrunch)