Quick Commerce Leader Zepto Eyes Further Growth with Potential $400 Million Fundraise

Zepto Funding
Preeti Bali / 6:28 am / June 27, 2024

Just a week after securing a significant investment of $665 million, quick commerce leader Zepto is reportedly in talks to raise an additional $400 million, according to The Information. This latest funding round would come shortly after the company’s valuation reached $3.6 billion. The previous round saw co-leadership from DST Global and Avra, alongside participation from Avenir and existing investors like Nexus Venture Partners, StepStone Group, Contrary, and Glade Brook Capital.

Strong Revenue Growth and Early Profitability

Zepto’s Co-founder and CEO, Aadit Palicha, expressed a positive outlook for the company. He projected that Zepto is on track to surpass $1.5 billion in annualized sales by the coming month. Palicha emphasized the company’s current financial performance, highlighting an annualized gross profit of $300 million based on their current monthly profit. “Reaching these milestones while maintaining customer satisfaction strengthens our belief that we’re well-positioned for a public offering in the near future,” Palicha stated.

Rapid Path to Profitability

Earlier reports indicated a remarkable year-on-year increase in Zepto’s GMV (gross merchandise value), exceeding $1 billion. Notably, nearly 75% of the company’s stores (dark stores or warehouses) achieved complete EBITDA (earnings before interest, taxes, depreciation, and amortization) positivity by May 2024. This level of profitability, historically taking nearly two years to attain, is now being achieved within just six months. Zepto stands on the cusp of overall EBITDA positivity, experiencing a staggering 140% year-over-year growth on a base of $1 billion annualized GMV.

Strategic Growth Plan

Zepto’s strategy emphasizes “fiscal discipline” as it scales its operations. The company plans to reinvest capital generated from mature stores back into the business, fueling its expansion from 350 stores to 700 stores.

Quick Commerce: A Focus for Major Players

Zepto’s fundraising efforts coincide with a broader industry trend. Several foodtech and e-commerce companies are now prioritizing quick commerce as a key growth driver. Zomato, for example, anticipates that its quick commerce platform, Blinkit, will soon have a larger user base (monthly transacting users or MTUs) compared to its parent company. Zomato’s recent quarterly earnings report also outlined plans to significantly expand its dark store network to 1,000 locations by March 2025.

Profitability and Expansion for Swiggy

Swiggy, another major player in the food delivery space and a recent IPO applicant, is focusing on profitability and geographical expansion. The company has introduced additional revenue streams through restaurant advertising and platform fees. Investors remain optimistic about Swiggy’s continued growth, driven by the increasing penetration of its quick commerce business, higher average order values, and organic customer acquisition.

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