Zepto raises $350 million in largest-ever domestic funding round
What's the story
Indian quick-commerce start-up Zepto has raised a whopping $350 million in its third funding round in just six months.
The massive financial boost comes as part of the company's strategy to bolster its market position against rivals and gear up for a planned IPO next year.
The latest funding round, led by Motilal Oswal's private wealth division, marks the largest 100% domestic fundraising in India's start-up ecosystem.
Valuation
Zepto's valuation remains steady at $5 billion
The latest funding round was joined by Indian family offices, rich individuals, and asset manager Motilal Oswal. Notably, this investment keeps Zepto's valuation unchanged at $5 billion.
Among the investors in this new round are Motilal co-founder Raamdeo Agrawal, family offices of Mankind Pharma, RP-Sanjiv Goenka Group, Cello Group, Haldiram's Group, and celebrities like Amitabh Bachchan and Sachin Tendulkar.
Investor base
Zepto's fundraising aims to increase Indian investor base
Zepto's fundraising effort is also part of its strategy to increase the number of Indian investors on its cap table, as foreign ownership currently exceeds two-thirds.
Since June, the Mumbai-based start-up has raised over $1.35 billion.
The company operates in a quick-commerce market projected by Morgan Stanley to be worth $42 billion by 2030, representing 18.4% of total e-commerce and 2.5% of retail sales in India.
Market impact
Quick-commerce platforms create parallel commerce in India
Quick-commerce platforms such as Zepto are building a "parallel commerce for convenience-seeking customers" in India, Morgan Stanley said.
Although they operate at lower margins than traditional retail, these platforms are projected to achieve contribution margins of 7% to 8% and adjusted EBITDA margins of over 5% by 2030.
Zepto, which fulfills over seven million orders across 17+ cities daily, is set to record annualized sales of $2 billion.
Future plans
Zepto's IPO and growth projections
Meanwhile, Zepto plans to go for an IPO in India next year. The company's CEO Aadit Palicha has projected a 150% growth rate over the next 12 months.
However, the quick-commerce segment's rapid expansion has also resulted in the closure of around 200,000 neighborhood stores in the last year.
This trend has raised concerns among industry bodies such as the All India Consumer Products Distributors Federation over possible adverse effects on traditional retail outlets.