Zepto secures $450M funding from Calpers, valuation hits $7B

Quick-commerce startup Zepto is preparing to raise about $450 million in a fresh funding round led by the US pension fund Calpers, valuing the company at $7 billion, according to sources close to the development. The round will also see participation from existing backers, including General Catalyst, Avra, Lightspeed, StepStone, and Nexus Venture Partners.

Zepto Secures Major Funding Led by Calpers

The new round, structured as a mix of both primary and secondary transactions, adds to Zepto’s financial arsenal of nearly $1 billion, critical as the competition in India’s quick-commerce sector escalates with global and domestic giants entering the fray.

Rising Competition in India’s Quick-Commerce Space

Zepto faces stiff competition from established and well-funded rivals. Eternal (Blinkit’s parent company) currently holds $3.3 billion in cash reserves, Swiggy has $1.1 billion, while Tata Sons is in the process of raising $1.3 billion to fuel its digital initiatives. Meanwhile, Amazon and Flipkart continue to aggressively expand their grocery and instant delivery segments.

So far, Zepto has raised $2 billion at a $5 billion valuation. In 2024 alone, the company pulled in $1.35 billion, signaling strong investor confidence in its growth trajectory.

Improved Unit Economics and Cash Burn Reduction

Unlike many of its peers, Zepto has managed to significantly cut its cash burn—from nearly ₹180 crore a quarter to double digits. This improvement stems largely from aggressive growth in advertising revenues and private-label sales. Notably, Zepto’s ad business has emerged as a key revenue driver, reaching an annual run rate of $200 million, a five-fold jump from $40 million last year.

Operational Challenges and Market Pressures

Despite the funding momentum, Zepto faces hurdles in scaling operations. Its food delivery vertical, Zepto Café, has been forced to shut down 45–50 outlets owing to sourcing and staffing issues. Similarly, growth in grocery Gross Merchandise Value (GMV), which had tripled to $3 billion earlier this year, has since slowed.

The company’s dark store expansion—a vital component of the quick-commerce model—has also lagged behind competitors. This shift indicates Zepto’s transition from rapid expansion towards greater operational discipline and efficiency.

Financial Performance and IPO Roadmap

Zepto’s revenues surged 149% year-on-year, reaching ₹11,100 crore in FY25. However, the company has yet to achieve profitability, highlighting the ongoing challenges of scaling in a highly competitive industry.

While there has been speculation about an IPO, Zepto has reportedly decided to delay listing plans. As a result, external funding remains crucial to fuel its growth strategy, sustain operations, and protect its market position in India’s intensifying quick-commerce ecosystem.

Conclusion

Zepto’s latest funding milestone, led by Calpers with a $450 million investment at a $7 billion valuation, highlights both investor confidence and the company’s growing significance in India’s fast-evolving quick-commerce landscape.

With sharper focus on unit economics, reduced cash burn, and robust advertising revenues, Zepto has shown that it can adapt its business model to balance growth with operational discipline.

The funding will provide the company with critical financial firepower to strengthen its supply chain, expand private-label offerings, and enhance customer acquisition strategies.

Yet, challenges remain. The shutdown of Zepto Café outlets, slowing GMV growth, and delayed IPO plans underscore the operational and strategic hurdles the startup must overcome. In an intensely competitive market dominated by Blinkit, Swiggy, Amazon, Flipkart, and BigBasket, Zepto’s ability to scale sustainably while innovating will be decisive. Its next phase will test whether it can transform short-term momentum into long-term leadership.