In a bid to solidify its position as a leader in the Indian quick commerce space, Zepto is in advanced talks to secure $100 million in new investments. This will be the startup’s third funding round in just six months, underscoring its rapid growth and the increasing interest from domestic investors.

A Fast-Growing Player in Quick Commerce

Founded in Mumbai, Zepto has revolutionized grocery delivery by promising items at customers’ doorsteps in just 10 minutes. Operating in multiple Indian cities, the startup has quickly gained traction, attracting significant attention from both investors and consumers alike.

The new funding round is primarily aimed at Indian family offices and high-net-worth individuals. Motilal Oswal, a major player in asset management, is leading the fundraising efforts. The firm previously invested $40 million in Zepto and has reportedly secured commitments for over half of the new funding allocation.

Impressive Valuation Amidst Market Challenges

This latest investment is expected to value Zepto at a staggering $5 billion post-money, the same valuation at which it closed a $340 million round in August. Over the last six months, Zepto has raised more than $1 billion, all of which remains securely in its bank, signaling strong investor confidence.

With plans to go public next year, Zepto aims to broaden its base of domestic investors, which is crucial for its future growth. The startup boasts an impressive lineup of backers, including Avra, Lightspeed, Nexus, StepStone Group, YC Continuity, Glade Brook, and Contrary.

The Quick Commerce Landscape in India

While quick commerce startups globally are facing consolidation or shutdowns, the model continues to gain momentum in India. According to TechCrunch’s analysis, these startups are projected to achieve over $6 billion in sales this year.

This shift in consumer behavior has forced established e-commerce giants like Flipkart, Myntra, and Nykaa to rethink their delivery strategies, striving to minimize delivery times and retain market share. Recent market shifts have even affected shares of Dmart, one of India’s largest brick-and-mortar retailers, as it struggles to compete with quick commerce players.

Analysts at Morgan Stanley noted, “Quick commerce players are expanding cities, categories, SKUs, AOVs, and discounts, creating parallel commerce for convenience-seeking customers.” This suggests that the quick commerce sector is not just a trend but a fundamental shift in how consumers shop.

Competing with Industry Giants

Zepto faces tough competition from established players like Zomato-owned BlinkIt, Prosus-backed Swiggy’s Instamart, and Tata’s BigBasket. However, co-founder and CEO Aadit Palicha recently shared with investors that Zepto has significantly boosted its annualized net run rate. The startup projects a remarkable 150% growth in the next 12 months, emphasizing its commitment to expanding its market presence and product offerings.

Conclusion

As Zepto prepares for its upcoming funding round and potential IPO, it stands as a testament to the resilience and adaptability of quick commerce in India. The startup’s strategic focus on domestic investments and rapid growth positions it well to capitalize on the burgeoning demand for instant delivery services.