Zepto Secures $300 Million Investment from DST Global and Lightspeed

In a significant development within the quick commerce sector, Zepto, a prominent player based in Mumbai, is on the verge of finalizing a substantial $300 million Series E funding round. The investment, which will see participation from leading venture capital firms DST Global and Lightspeed Venture Partners, is expected to value the company between $2.5 billion and $3 billion.

The funding round, which reportedly began in April, has garnered significant interest from various high-profile investors. According to sources, "The round began in April and has since attracted significant interest from prominent investors. Financing is nearly finalized, with an official announcement expected imminently." This indicates a strong backing for Zepto's growth trajectory. The round is anticipated to be led by General Atlantic and the Abu Dhabi Investment Authority (ADIA), among others.

Lightspeed's investment in Zepto will be facilitated through its growth-stage investment vehicle, underscoring the firm’s confidence in the quick commerce sector's potential. Zepto's last funding round in August 2023 saw the company raise $200 million at a $1.4 billion valuation, propelling it into the unicorn club. Since then, Zepto has made significant strides, with its operating revenue surging over 14 times year-on-year to INR 2,024 crore in FY23. However, the company's losses also tripled year-on-year to INR 1,272.4 crore during the same fiscal year.

While Zepto has yet to disclose its FY24 financials, the company has previously stated that it is on track to achieve EBITDA positive status. Based on revenue alone, Zepto is poised to outpace competitors like Blinkit. For context, Zomato-owned Blinkit reported revenues of INR 2,302 crore in FY24, just slightly higher than Zepto's FY23 revenue.

In FY24, Zepto introduced several new revenue streams, including platform fees, handling charges, surge fees, and a separate “cart fee” for orders below INR 100. Additionally, the company launched a new membership program called Zepto Pass, starting at INR 99 per month, targeting select users. These initiatives have bolstered Zepto's bottom line, positioning it favorably in the competitive quick commerce market.

As Zepto aims to leverage this funding round for further growth, a portion of the raised funds will also be allocated to meeting tax obligations associated with a potential reverse flip from Singapore to India. The company is reportedly close to redomiciling to India and has set its sights on a public listing by 2026.

The quick commerce landscape is becoming increasingly competitive, with major players like Flipkart and JioMart expected to enter the fray alongside Blinkit, Zepto, and Swiggy’s Instamart. This influx of competitors highlights the sector's rapid growth and the fierce competition that lies ahead.

With this new round of funding, Zepto is not only securing its position in the market but also setting the stage for future expansion and innovation. The anticipated official announcement will likely provide more details on how Zepto plans to utilize these funds to continue its upward trajectory in the quick commerce sector.