Zepto's valuation rockets to $5 billion as investors double down on India's e-commerce boom

Indian online grocery startup Zepto has seen its valuation surge by approximately 40%, reaching $5 billion following a recent funding round led by General Catalyst Partners. This development highlights the ongoing interest of foreign investors in India's burgeoning e-commerce sector.

The $340 million funding round also saw participation from new investors Dragon Fund and Epiq Capital, while existing investors like Lightspeed Venture Partners and DST Global increased their stakes in the company, according to a statement released by Zepto on Thursday.

Zepto, headquartered in Mumbai, had previously raised $665 million in June, with private equity firm Avenir and Lightspeed among the new investors at that time. That round had valued the company at $3.6 billion.

The inflow of investments into India's e-commerce industry is occurring despite concerns surrounding regulatory issues at Paytm and insolvency proceedings at edtech firm Byju's, which have made some investors cautious. In May, Google, a subsidiary of Alphabet Inc., invested $350 million in Walmart Inc.'s Flipkart, reflecting confidence in India's rapidly growing middle class.

Zepto continues to expand its user base as more consumers in India embrace online shopping. The company has announced plans to double its warehouse count to over 700 by March 2025 by reinvesting sales from its established dark stores. Additionally, Zepto is reportedly preparing for a public listing in the near future.

The company was founded in 2021 by Aadit Palicha and Kaivalya Vohra, who dropped out of Stanford University's computer science program to return to India and launch the startup. At the time, both founders were still teenagers.

Zepto operates in India's fiercely competitive grocery delivery market, which is characterized by low margins but high volumes. The company faces competition from major players such as Amazon India's unit, Swiggy Ltd., Zomato Ltd., and Tata Group's BigBasket.

Additionally, the Unicorn quick-commerce firm announced on August 6 that it is working on plans to shift the majority of its employee base as well as its headquarters to Bangalore, sources aware of the development said.