Zepto draws interest for $250 million more following $665 million raise; General Catalyst, Sovereign Funds queue up

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

Instant grocery delivery app Zepto has drawn investor interest for an additional $250 million in a fresh round that now values the company at about $4.6 billion, people aware of the development told Moneycontrol. The round, which could touch $400 million in size, will also see General Catalyst coming on board as an investor, these sources said.

Apart from General Catalyst, Zepto is also learnt to have received interest from private equity as well as Sovereign funds such as KKR, Singapore’s GIC and Abu Dhabi Investment Authority (ADIA), underscoring investor interest in the rapidly growing quick commerce sector in India.

Zepto, which competes with Zomato’s Blinkit, Swiggy Instamart and Tata’s BigBasket among others, is seeing a surge of interest, on the back of its execution chops and rapid growth in the last three years. Its gross merchandise value (GMV) has crossed $1 billion and is on track to turn profitable on an EBITDA basis in the coming months.

The investor interest for a new round, especially at a higher valuation, comes less than two weeks after Zepto announced it raised $665 million from existing and new investors at a valuation of $3.4 billion, which was more than double $1.4 billion in August 2023.

If the talks go through, Zepto's valuation would have jumped 3.3X in nearly 11 months, amid a broader funding winter, where late-stage deals have slowed down in the last couple of years.

Zepto co-founder and CEO Aadit Palicha had earlier told Moneycontrol that the company’s gross merchandise value (GMV) has grown to over $1 billion in under 2.5 years and its bottom line has improved dramatically over the past months because of which the company has been able to raise funds comfortably.

“It was known that more money was coming into Zepto even before its previous round had closed. If things go as planned, General Catalyst, along with other investors, will join the company’s cap table as part of the new round,” one of the persons cited above told Moneycontrol.

Which investor will chip in and how much is not clear yet? The person added that negotiations are still underway so deal contours may change.

While Zepto said it doesn’t comment on market speculation, General Catalyst, ADIA, KKR and GIC did not respond to email queries.

Once the round closes, Zepto will become the only company to have raised over $1 billion in such a short span this year, surpassing even Flipkart which closed a massive $950 million round in May. 

Such large fundraises have become rare since mid-2022 when investors became selective with the kind of companies they back. Such a funding frenzy was last seen during 2020 and 2021 when India minted a record number of unicorns as investors poured money into pandemic favourite sectors such as edtech.

General Catalyst’s play

For General Catalyst this will be the first major investment since the US-based venture Capital firm announced that it was merging with homegrown fund Venture Highway to strengthen its presence in India.

General Catalyst will invest anywhere between $500 million and $1 billion in India over the coming years, Moneycontrol reported last month. It already backs Cred, Uni, Spinny, Orange Health, FarMart, and Loop Health and others in India.

Globally, the 24-year-old company has backed payments startup Stripe, social media firm Snap, French artificial intelligence startup Mistral, rental firm Airbnb, and several more.

The talks of General Catalyst investing into Zepto also come at a time when the venture fund is closing a new $6 billion fund for tech startups, The Financial Times had reported in April.