Zepto Raises USD 450 Million at USD 7 Billion Valuation, Expands ESOP Pool by USD 170 Million

Bengaluru, India – Quick commerce startup Zepto has secured $450 million in a fresh funding round, pushing its valuation to $7 billion, up from $5 billion a year ago. The round includes both primary and secondary transactions, with a primary infusion of approximately $300 million into the company.

The funding was led by CalPERS (California Public Employees' Retirement System) and venture capital firm General Catalyst, with continued participation from existing investors including Lightspeed, Avenir, Gladebrook, StepStone, and others.

Key Highlights of the Fundraise

Strategic Move Ahead of IPO

According to Zepto's CEO Aadit Palicha, the capital raise was timed to strengthen the company's balance sheet before filing for its IPO. Originally, the company intended to proceed with its listing earlier, but record growth in the April–June quarter – including 200% year-on-year growth and hundreds of new stores reaching profitability – led to increased investor interest and the decision to raise capital first.

Palicha stated that raising $600–700 million would typically require going public, but a unique private market opportunity enabled Zepto to secure nearly that amount in this round, deferring the IPO to a later phase. This strategic timing mirrors how Indian tech startup funding has jumped significantly in 2024, creating favorable conditions for large private rounds.

Why This Round Matters

• Pre-IPO Strengthening: The large capital infusion gives Zepto financial muscle to optimize operations and show robust metrics ahead of its IPO filing.
• Institutional Confidence: The participation of CalPERS – a large pension fund that typically doesn't invest directly in startups – signals significant institutional trust in Zepto's long-term potential, similar to why VCs are betting big on AI application startups in India.
• ESOP Expansion: A $170 million boost to the ESOP pool suggests a strong focus on talent retention and employee wealth creation.
• Operational Milestones: The company claims it has turned around several hundred additional stores into profitability and continues to see explosive demand growth.

What's Next for Zepto?

• IPO Filing: Zepto aims to file its Draft Red Herring Prospectus (DRHP) within the next few quarters.
• Expansion Plans: With substantial capital in hand, Zepto is expected to expand its store network, deepen penetration in existing cities, and possibly enter new markets.
• Focus on Profitability: Continued focus on store-level profitability and operational efficiency remains central as the company prepares for public markets.
• Category Diversification: Zepto is expected to expand beyond groceries into categories like electronics, personal care, and fashion to boost order values and margins, potentially leveraging how augmented reality is revolutionizing Indian retail to enhance customer experience.

The Quick Commerce Landscape

Zepto operates in India's increasingly competitive quick commerce space, alongside rivals like Blinkit (owned by Zomato), Swiggy Instamart, and BigBasket Now. The latest funding puts Zepto ahead of most of its peers in terms of valuation and balance sheet strength. The success story is reminiscent of Porter joining the unicorn league with its impressive fundraise.

With rising investor appetite and a fast-growing consumer base, quick commerce continues to attract significant attention, though questions remain around sustainability and profitability as competition intensifies. This growth trajectory aligns with India's booming creator economy moving from $350B influence to a $1 trillion future, showcasing the broader transformation of India's digital economy.

As Zepto prepares for its public market debut, it joins a growing list of Indian startups that have successfully navigated the journey from startup to scale-up, benefiting from India's new foreign investment rules that could supercharge startup growth. The company's rapid expansion and focus on profitability exemplify the maturation of India's startup ecosystem.