Zepto Raises $450 Million at $7 Billion Valuation
Indian quick-commerce startup Zepto has secured $450 million in a mixed primary and secondary funding round led by the California Public Employees’ Retirement System (CalPERS), a prominent U.S. pension fund. This round features participation from existing investors such as Avenir, Avra, Lightspeed, Glade Brook, The Stepstone Group, and Nexus Venture Partners. Following this financing, Zepto announced plans to pursue an initial public offering (IPO) in 2026, signaling its ambition to capitalize on the expanding quick-commerce market in India.
Intensifying Competition in Indian Quick-Commerce
Zepto operates in a highly competitive environment alongside quick-commerce peers such as BlinkIt (formerly Zomato’s Eternal), Swiggy Instamart, and Tata-owned BigBasket—all affiliated with publicly listed companies. The startup has aggressively raised capital, amassing $1.3 billion last year alone. In addition to these players, Zepto faces competition from established e-commerce giants like Flipkart and Amazon, which have launched their own rapid delivery services. The market also witnesses specialized vertical startups focusing on niches such as food delivery, apparel, home services, and curated grocery offerings.
Strong Growth and Operational Profitability
Under CEO Aadit Palicha’s leadership, Zepto has expanded its daily order volume from 500,000 five quarters ago to 1.7 million today. Palicha emphasized that the company has achieved profitability in its dark store operations while continuing to acquire over 10 million monthly transacting users.
“The key metric for this round of funding was our ability to turn dark stores profitable while acquiring over 10 million new monthly transacting users. We obviously invested incrementally in customer acquisition and store launches. But even as you were doing that, we were able to keep turning stores profitable,” said Palicha.
Despite some operational challenges, including pausing its Zepto Cafe offering in 44 cities due to staffing issues, the segment maintains a run rate exceeding $110 million and continues to grow rapidly.
Expanding Market Opportunities
Industry analysts remain optimistic about the Indian quick-commerce market’s prospects. Morgan Stanley projects the sector could reach $42 billion by 2030, while Bernstein estimates a potential $100 billion valuation within the next decade. Quick commerce is increasingly becoming the primary channel for grocery purchases in target markets. Zepto currently operates in over 80 cities with more than 1,000 dark stores, focusing primarily on metropolitan areas. However, smaller cities now contribute approximately 20% of total order volume, illustrating geographical expansion.
User Experience and App Optimization
Zepto’s app features promotions such as Super Saver discounts for large grocery orders and highlights diverse categories including electronics, fashion, and home decor. CEO Palicha acknowledged that the app’s interface has become cluttered and committed to simplifying the user experience in the coming months.
CalPERS’ Strategic Entry into Indian Quick-Commerce
CalPERS’ decision to lead Zepto’s funding round marks a notable shift in its investment strategy. Traditionally investing through intermediaries, the pension fund has expanded its direct venture capital exposure significantly since 2022, aiming to grow its allocation from $800 million to $5 billion. This move signals strong institutional confidence in India’s fast-growing quick-commerce sector and reflects CalPERS’ increasing appetite for direct investments in emerging markets. The fund is also connected to Zepto’s existing investors through investments in Lightspeed and General Catalyst.
FinOracleAI — Market View
Zepto’s latest funding round and valuation underscore the rapid maturation of India’s quick-commerce landscape. As consumer demand for instant delivery intensifies, Zepto’s operational scale and profitability position it well to capitalize on this growth trajectory. Institutional backing from CalPERS further validates the sector’s investment appeal.
- Opportunities: Expansion into tier-2 and tier-3 cities; app interface optimization to boost user retention; leveraging profitability in dark stores for sustainable growth; potential IPO to enhance capital access.
- Risks: Intensifying competition from established and emerging players; operational challenges in scaling services like Zepto Cafe; regulatory changes affecting quick-commerce logistics; maintaining customer acquisition cost efficiency.
Impact: Zepto’s strong fundraising and strategic investor base signify a positive market outlook for India’s quick-commerce sector, supporting robust growth and increased investor confidence ahead of its planned IPO.
