Zepto, the Indian grocery delivery startup, has achieved a significant milestone with its valuation climbing to $5 billion, thanks to a recent funding round led by General Catalyst Partners. This represents a remarkable 40% increase in the company’s valuation.

The $340 million funding round also welcomed new investors Dragon Fund and Epiq Capital, while existing backers such as Lightspeed Venture Partners and DST Global further bolstered their investments. Zepto’s latest valuation marks a substantial leap from the $3.6 billion valuation achieved after a $665 million funding round in June, which saw participation from Avenir and Lightspeed.

Despite regulatory challenges at Paytm and insolvency concerns at edtech firm Byju’s, India’s e-commerce sector continues to attract significant investment. In May, Google, a subsidiary of Alphabet Inc., demonstrated confidence in India’s market by investing $350 million in Flipkart, Walmart’s Indian arm.

Zepto, headquartered in Mumbai, is expanding rapidly in response to the growing online shopping trend in India. The company plans to double its warehouse count to over 700 by March 2025, leveraging sales from its dark stores. Additionally, Zepto is reportedly preparing for a public listing in the near future.

Founded in 2021 by Aadit Palicha and Kaivalya Vohra, who both left Stanford University’s computer science program to start the company, Zepto operates in a highly competitive grocery delivery market with tight margins but high volumes. The company competes with major players such as Amazon India, Swiggy Ltd., Zomato Ltd., and Tata Group’s BigBasket.

On August 6, Zepto announced plans to relocate its headquarters and a significant portion of its workforce to Bangalore, reflecting its ongoing growth and strategic realignment.