Zepto, India’s fast-growing quick commerce startup, is on a meteoric rise. With a recent $350 million funding round, Zepto’s valuation has skyrocketed to a staggering $5 billion. What’s even more astonishing is the pace at which this three-year-old startup is attracting investments. In the last 50-60 days, Zepto secured a whopping $1 billion, representing over 60% of its total funding of $1.6 billion.
The massive influx of capital and dramatic surge in valuation signal strong investor confidence in Zepto’s future. The question is, can it live up to the hype?
A Funding Frenzy
In August 2023, Zepto achieved unicorn status by raising $200 million at a valuation of $1.4 billion.
Further, in June 2024, Zepto raised approximately $665 million at a valuation of $3.6 billion, marking the largest funding round for any startup this year.
Zepto’s recent $340 million fundraising round is largely driven by $250 million from General Catalyst and $50 million from Mars Growth, with the rest coming from existing investors, as reported by Moneycontrol. This investment, entirely in primary capital, values Zepto at $5 billion in August 2024.
Burning Cash for Growth
Zepto’s rapid growth has made it the third largest player in India’s quick commerce market, with over 20% share. The brand is currently competing against more established rivals such as Zomato Blinkit, which has a 39% market share, and Swiggy Instamart, which has a 37% market share.
Looking into its financial performance, Zepto’s operating revenue surged an eye-popping 1321.7% YoY, from just Rs 142.36 crore in FY22 to Rs 2,024 crore in FY23.
However, to fuel its ambitious plans, Zepto is burning through cash at an alarming rate. The company’s net losses widened 226.2% YoY, from just Rs 390 crore in FY22 to Rs 1,272 crore in FY23. The fiscal 2024 results are yet to be disclosed.
It’s worth noting that the aggressive expansion strategies adopted by many e-commerce companies in India have led to significant losses, as these companies often prioritize growth over profitability.
Zepto’s Ambitious Future Plans
Zepto is not resting on its laurels. The quick commerce startup has already announced plans to expand beyond metros. By March 2025, Zepto aims to double the number of dark stores from the current 350 to over 700.
It will be intriguing to see how the demand for quick grocery delivery – which Zepto mainly focuses on – develops in tier-2 and tier-3 cities, where consumers traditionally rely more on in-store shopping.
Additionally, Zepto plans to grow its team from 1,600 to over 2,000 employees in the coming months, supporting its growth ambitions.
Zepto’s founders, Aadit Palicha and Kaivalya Vohra, have set their sights high. At the Moneycontrol Startup Conclave 2024 on August 9, 2024, CEO Aadit Palicha drew a comparison between Zepto and Amazon in its early days, expressing hopes of reaching a valuation between $50-$80 billion if execution is successful.
At the JITO Incubation and Innovation Foundation’s (JIIF’s) Innovation Conclave, Palicha mentioned Zepto’s goal of expanding to the top 40 cities in India and potentially surpassing DMart’s valuation, targeting a future valuation beyond $30 billion.
India’s Q-commerce market, in terms of GMV, is estimated to clock a 40-45% CAGR over the next three years from $2.8 billion in 2023. Between 2022 and 2023, the quick commerce market grew 77% YoY compared to the 15% YoY growth recorded in the e-commerce market in India. However, the success of quick commerce companies depends heavily on execution, as the demand is expected to surge in the coming years.
Can Zepto outmanoeuvre its rivals in India’s quick commerce market and capture a significant market share? Only time will tell.
