Zepto closes $450 million funding from Calpers and existing investors; taking total fundraise close to $2 billion in under two years

Aadit Palicha, co-founder and CEO, Zepto

Quick commerce major Zepto has raised about $450 million (around Rs 4,000 crore) in a new round led by California Public Employees' Retirement System (Calpers), a pension fund based in the United States and General Catalyst, an existing investor, the firm announced on October 16. The round now values Zepto at $7 billion, up from $5 billion just last year.

Zepto's existing investors such as Avenir, Avra, Lightspeed, Glade Brook, The Stepstone Group and Nexus Venture Partners also participated in the current round.

The round, a mix of primary capital with a component of secondary share sales, has come at a time when Zepto is looking to up the stakes in India's red-hot quick commerce market which is now worth $7 billion. Zepto is now expected to compete more closely with Eternal-owned Blinkit, Swiggy's Instamart, Tata's BigBasket, Flipkart Minutes and Amazon Now.

"This financing is a reflection of our team’s  execution to grow the business rapidly while consistently building operating leverage. We now have approximately $900 million of net cash in bank and more than well-capitalised for the future," Aadit Palicha, co-founder and CEO, Zepto said.

Zepto's cash balance of $900 million (around Rs 7,900 crore) compares to Eternal's cash balance of Rs 18,314 crore and Swiggy's roughly Rs 7,700 crore (Rs 5,354 crore cash balance plus Rs 2,400 crore cash proceeds by selling its stake in Rapido)

While a bulk of the $450 million came in the form of secondaries, early backers sold their shares in the company and made way for new investors. This is among Zepto's largest rounds so far since it was founded in 2020.

The company has now raised close to $3 billion, of which nearly $2 billion has come only in the past 18 months or so as it locks horns with its larger rivals to become the market leader in the rapid grocery space.

“Zepto scaled order volume 200% over the past 18 months and was still able to consistently turn more and more of their stores profitable even as they invested in growth. That performance, and the $500B+ Indian Grocery opportunity, gave us conviction that Zepto is building a generational consumer internet company,” said Vivek Subramanian, Partner, chief product officer, Goodwater Capital.

Moneycontrol was first to report on Zepto's $450 million round led by Calpers on October 1.

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 told Moneycontrol.

What is Zepto’s valuation?

Zepto will now be valued at $7 billion, up 40 percent from $5 billion just last year.

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.