Zepto to raise $500 million from General Catalyst, Avenir and others in fresh round at $7 billion valuation

Zepto co-founders Aadit Palicha (L), and Kaivalya Vohra (R)

Zepto, the quick commerce startup that raised a whopping $1.35 billion last year, is back in the market and is now in advanced stages to raise another $450-500 million in primary capital from existing investors in a fresh round that values the company at $7 billion post-money, sources told Moneycontrol.

The fresh valuation of $7 billion is a 40 percent increase from $5 billion that Zepto commanded during its fundraise last year.

Existing investors General Catalyst and Avenir Growth will put in a large chunk of the $450-500 million, along with participation from existing investors who will infuse capital on a pro rata basis.

Moneycontrol was first to report, on June 4, that General Catalyst and Avenir Growth are looking to anchor Zepto’s latest round as the timeline to go public has moved by a few weeks.

“Apart from General Catalyst and Avenir Growth, it is also likely that one or two other investors, who specialise in public markets, may participate in the ongoing round,” one of the persons cited above said.

The round is expected to close in about a month’s time.

Zepto did not reply to Moneycontrol’s queries.

Zepto’s talks to raise fresh funds comes as it faces increasing competition from top players such as Eternal’s Blinkit and Swiggy’s Instamart. At the same time, companies such as BigBasket and Flipkart Minutes, have been leveraging their connection with brands and entering into new territories such as large appliances and more to scale operations and eat into the market share of the top players.

Domestic vs international

While Zepto co-founder and CEO Aadit Palicha has been keen on raising money from Indian investors and family offices, to increase domestic ownership, he has also been negotiating with large foreign investors who are willing to bet on India’s burgeoning quick commerce market.

In the past months, investors like Motilal Oswal and others picked up additional shares in Zepto, as first reported by Moneycontrol, through secondary transactions that went beyond $100 million in size. Early foreign backers, like Rocket Internet and others, sold shares to Indian investors which helped Zepto increase domestic ownership in the company.

A company being owned largely by domestic investors helps at the time of a domestic IPO.

At present, thanks to those transactions, around 40 percent of Zepto is owned by Indian investors, including Ranjan Pai’s Calypond Capital, Motilal Oswal and several others.

However, once the current round closes, the domestic ownership in Zepto will reduce to around 35 percent, as the foreign institutional investors (FIIs) will anchor this round, sources told Moneycontrol.

Zepto is however confident that it will become a majorly owned Indian firm at the time of its IPO, as has been the case with other new-age firms in the past.

Excluding the $500 million ongoing fundraise, Zepto has raised close to $2 billion in capital from Nexus Venture Partners, The StepStone Group, Avra and several others.