Zepto Raises $450M at $7B Valuation - Quick Commerce in India

Zepto Secures $400 Million Funding Led by CalPERS

Indian quick-commerce company Zepto has announced a successful funding round, raising $400 million. This investment was spearheaded by California Public Employees’ Retirement System (CalPERS), a prominent U.S.-based pension fund, marking a significant new partnership.

Investment Details and Future Plans

The funding round incorporates both primary and secondary investments, with participation from current investors. These include Avenir, Avra, Lightspeed, Glade Brook, The StepStone Group, and Nexus Venture Partners. Following this capital injection, Zepto is strategically positioning itself for an initial public offering (IPO) within the next year.

Competitive Landscape in India’s Quick-Commerce Sector

Zepto operates within a dynamic and competitive quick-commerce market in India. Key competitors include Blinkit (formerly Eternal’s), Swiggy Instamart, and BigBasket, all of which are affiliated with publicly traded companies.

Recent Funding Activity and Market Shifts

The company has actively pursued funding, securing $1.3 billion over the past several months. Since Zepto’s previous funding in November 2024, notable market developments have occurred. Swiggy successfully launched on the Indian stock exchange, and Blinkit exceeded Zomato in gross order value during the first quarter of 2025.

Furthermore, established e-commerce giants like Flipkart and Amazon have entered the quick-commerce arena with their own delivery services, intensifying the competition.

Diversification of E-commerce Models

A trend towards specialized e-commerce is also emerging. Companies like Swish and Zing focus on food delivery, while Nykaa, Myntra, Silkk, and Blip aim to provide one-hour apparel delivery. Snabbit facilitates booking home services within 10 minutes, and FirstClub employs a curated approach to grocery delivery.

Zepto’s Growth Trajectory and Operational Performance

Zepto’s CEO, Aadit Palicha, expresses strong confidence in the company’s continued expansion. He reports a substantial increase in daily orders, rising from 500,000 five quarters ago to 1.7 million currently, with expectations for sustained growth.

Profitability and User Acquisition

“A crucial factor in securing this funding was our demonstrated ability to achieve profitability in our dark stores while simultaneously adding over 10 million new monthly transacting users,” Palicha explained to TechCrunch. He emphasized a balanced approach of customer acquisition and store expansion.

Zepto Cafe and Market Expansion

While Zepto, along with Blinkit and Instamart, competes across multiple categories, including food delivery, the company temporarily paused its Zepto Cafe service in 44 cities due to staffing issues. Despite this, Zepto Cafe currently generates over $110 million in annual revenue and is experiencing rapid growth.

Market Outlook and Future Projections

The quick-commerce market in India exhibits promising signs. Morgan Stanley forecasts a market size of $42 billion by 2030, while Bernstein estimates it could reach $100 billion within a decade. The firm also highlights that quick commerce is becoming the preferred method for grocery shopping in target markets.

Dark Store Network and Geographic Reach

Zepto has primarily focused on expanding its services within major Indian cities. J.P. Morgan data indicates that Blinkit operates a dark store network in over 204 cities, compared to Swiggy Instamart’s 104 and Zepto’s 80. Zepto currently operates over 1,000 stores and intends to add hundreds more in the coming year.

The startup is also witnessing increasing demand from smaller cities, now accounting for approximately 20% of its total order volume.

App Interface and User Experience

Zepto’s app features offerings like Super Saver, providing discounts on bulk grocery orders, and highlights categories such as electronics, fashion, and home decor. However, this has resulted in a somewhat cluttered interface. Palicha acknowledges this and plans to simplify the app’s design in the coming months.

CalPERS’ Investment Strategy and India’s Venture Capital Landscape

This investment represents a significant move for CalPERS. The pension fund typically invests in venture capital through intermediary funds, rather than leading direct investments in startups. Since 2022, CalPERS has been actively increasing its venture capital exposure, aiming to scale its allocation from around $800 million to a target of $5 billion, following a period of underperformance.

CalPERS’ decision to lead this funding round in an Indian quick-commerce startup underscores its confidence in India’s rapid delivery sector and potentially signals a growing willingness to make direct venture investments in emerging markets. The fund also holds investments in funds backing Zepto’s existing investors, such as Lightspeed and General Catalyst.