Zepto, the fast-growing quick-commerce unicorn based in Mumbai, has successfully raised an additional $31 million in an extended funding round, according to recent regulatory filings. This latest capital injection follows their substantial $200 million funding round from August.
Notably, the newly secured funds have been contributed by existing investors, including Goodwater Capital and Nexus Venture Partners. Furthermore, Mangum II LLC and prominent angel investors such as Oliver and Lish Jung also participated in the latest funding round, as indicated by the regulatory filings. It’s worth mentioning that Zepto’s valuation remains unchanged at $1.4 billion following this fresh injection of funds. With this recent funding success, Zepto has now accumulated a substantial total of nearly $600 million in funding, which includes the $200 million raised in August, valuing the company at $1.4 billion.
In the initial $200 million funding round, a significant portion of $105 million was provided by the StepStone Group ($75 million) and Goodwater Capital ($30 million). It is important to note that both StepStone Group and Goodwater Capital were first-time investors in Zepto. While this marked StepStone’s initial direct investment in India, Goodwater Capital has previously invested in Indian startups such as the audio-streaming platform Pocket FM and prominent edtech companies like Teachmint and Yellowclass.
The remaining $95 million in that round came from Zepto’s existing investors, which include Nexus Venture Partners, Glade Brook Capital, and Lachy Groom. Although Zepto has not actively sought funds from India-centric venture capitalists (VCs), it is possible that this dynamic could change in the future.
Zepto operates in a highly competitive market and faces rivals such as Blinkit (owned by Zomato), Swiggy Instamart, Dunzo (backed by Reliance), and BigBasket (BB Now), which is part of the Tata Group. The competition in the quick-commerce space remains fierce, with Blinkit and Instamart frequently trading positions as the top two players in the market. Zepto has positioned itself as the third-largest player in terms of order volumes, a point highlighted in a pitch deck the company presented to investors, as reported by Moneycontrol.
Zepto’s successive rounds of fundraising come at a time when concerns have arisen about the future viability of one of its competitors, Dunzo. Although auditors have expressed doubts about Dunzo’s status as a going concern in the future, the company remains confident in its ability to continue operating and is actively pursuing additional capital. During the fiscal year 2023, the quick-commerce unicorn Zepto demonstrated remarkable growth in revenue from operations, with figures rising from Rs 141 crore in FY22 to Rs 2,024 crore in FY23. This impressive increase can be attributed to the expansion of Zepto’s store count and the influx of new customers trying out the company’s services over the course of the year.
Throughout FY23, Zepto embarked on an aggressive expansion strategy by opening approximately 100 new stores, primarily in existing locations where the demand was high. However, it is important to acknowledge that expanding the number of stores proved to be a costly endeavor for the company. Regulatory filings reveal that the company’s total expenses surged significantly, climbing from Rs 533 crore in FY22 to a staggering Rs 3,350 crore during the fiscal year that just concluded. These mounting expenses also contributed to Zepto’s losses increasing threefold from Rs 390 crore in FY22 to Rs 1,272 crore in FY23.
In conclusion, Zepto’s ability to secure an additional $31 million in funding from existing investors underscores its resilience and appeal in the competitive quick-commerce market. While the company continues to experience rapid growth, it also faces the challenges associated with scaling operations and managing expenses effectively. Nonetheless, with the backing of dedicated investors and its commitment to the quick-commerce sector, Zepto remains a significant player in the ever-evolving landscape of on-demand services.