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Zepto has secured $350 million in new funding, its third round of funding in six months, as the Indian express commerce startup works to strengthen its position against its rivals ahead of a planned IPO next year.
Indian family offices, wealthy individuals and asset manager Motilal Oswal invested in the round, maintaining Zepto’s $5 billion valuation. Motilal co-founder Ramdeo Agrawal, the family offices of Mankind Pharma, RP-Sanjiv Goenka, Cello, Haldiram’s, Shehsaria and Kalyan, as well as celebrities Amitabh Bachchan and Sachin Tendulkar, are among the backers of this new investment, the largest of all. Domestic preliminary round in India.
The funding push comes as Zepto seeks to add Indian investors to its cap table, with foreign ownership currently exceeding two-thirds. TechCrunch first reported on the deliberations of the new round last month. The Mumbai-based startup has now raised more than $1.35 billion since June.
Express commerce sales — delivering groceries and other items to customers’ doorsteps in 10 minutes — in India are expected to exceed $6 billion this year. Morgan Stanley expects the market to be worth $42 billion by 2030, representing 18.4% of total e-commerce and 2.5% of retail sales. These strong growth prospects have forced established players, including Flipkart, Myntra and Nykaa, to reduce delivery times as they lose business to niche delivery apps.
Although flash commerce has not been a success in most pockets of the world, the model appears to be working particularly well in India, where retail stores are largely unregulated.
Express commerce platforms are creating “parallel commerce for customers seeking convenience” in India, Morgan Stanley wrote in a note this month.
Zepto and its competitors — Zomato-owned Blinkit, Swiggy-owned Instamart, and Tata-owned BigBasket — currently operate on lower margins than traditional retail, and Morgan Stanley expects the market leaders to reach 7% to 8% contribution margins and EBIT margins and adjusted depreciation and amortization (EBITDA). More than 5% by 2030. (Zepto currently spends about $35 million a month, according to several people familiar with that figure.)
Zepto, which serves a total of more than 7 million orders in more than 17 cities daily, is on track to record $2 billion in annual sales, according to an investor presentation reviewed by TechCrunch. The company expects 150% growth over the next 12 months, CEO Aadit Palicha told investors in August. The startup plans to go public in India next year.
However, the rapid growth of express trade has had a devastating impact on the small shops spread across thousands of Indian cities, towns and villages.
About 200,000 stores were closed last year, with 90,000 closed in major cities where express trade is more prevalent, according to the All India Consumer Products Distributors Association.
The union warns that without regulatory intervention, more neighborhood stores face closure as fast-commerce platforms prioritize growth over sustainable practices.
Zepto said it has created employment for hundreds of thousands of gig workers. “From day one, our vision has been to play a small role in nation building, create thousands of jobs, and provide better services to Indian consumers,” Balesha said in a statement.
Regulatory challenges loom. Unless an e-commerce company is majority owned by an Indian company or person, current rules prevent it from operating on an inventory model. Express Trade companies are not currently compliant with these rules.
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