Zepto nears $450 million funding at $7 billion valuation led by US pension fund Calpers

Zepto CEO and co-founder Aadit Palicha

Zepto is in the advanced stages of raising $450 million (around Rs 3,900 crore) as the quick commerce unicorn looks to double down on its offerings, scale operations and increase market share in a competitive landscape, people familiar with the development told Moneycontrol.

Who is leading Zepto’s latest fundraise? 

Zepto’s latest round is being co-led by new investor California Public Employees' Retirement System (Calpers), a pension fund based in the US, and General Catalyst (GC), an existing backer of Zepto, as per sources.

“The other internal investors such as Avenir, Avra, Lightspeed, Glade Brook, The Stepstone Group and Nexus Venture Partners will put in the remaining to hold on to their stake by participating in the current round,” one of the persons cited above said.

In July, Moneycontrol had exclusively reported Zepto was in talks to raise $500 million from GC and others at a $7 billion valuation in a fresh round.

Zepto and Calpers did not reply to Moneycontrol’s queries.

What is the construct of the round?

A bulk of the $450 million, around $350-$380 million, will be in primary capital that will directly go into Zepto’s coffers. The remaining, a small portion of around $70-100 million, will be in the form of secondary share deals where early investors will sell shares to new, incoming investors, sources said.

What is Zepto’s valuation?

Zepto will now be valued at $7 billion, up 40 percent from $5 billion just last year as the quick commerce company witnessed a “growth of over 20 percent in order volumes” as per one of the persons cited above.

What happens to the competitive intensity in quick commerce?

It is likely that Zepto’s fundraise will bring back the competitive intensity seen in the quick commerce market around 8-10 months ago.

In the past months, the quick commerce market has shown signs of cooling down as other listed players like Eternal’s Blinkit and Swiggy’s Instamart prioritised profitable growth. However, Zepto, which will be flushed with funds, will look to gain some lost ground and ramp up spending to increase its market share.

While Eternal’s Blinkit is the largest player, Swiggy’s Instamart and Zepto keep replacing each other for the second and third spot. With increased marketing spends, one player goes ahead of the other.