Quick commerce startup Zepto has secured a $340 million investment in its latest funding round, bringing its valuation to $5 billion, according to sources. Despite initially aiming to raise up to $400 million, the company chose to cap the round at $340 million. General Catalyst is contributing $250 million, Mars Growth is adding approximately $50 million, and the rest will be provided by existing investors.

Quick commerce apps delivering everything from electronics to vegetables within 10-20 minutes are gaining significant traction in India, even though this model hasn't succeeded in more developed markets. Zepto, founded by 23-year-olds Aadit Palicha and Kaivalya Vohra, notably excels in execution and competes effectively against established rivals like Blinkit and Swiggy Instamart.

Zepto's latest funding round follows a Moneycontrol report on July 2, which revealed that the company had attracted a $250 million investment from General Catalyst as part of a larger $400 million round. This announcement came shortly after Zepto completed a $665 million round, marking the largest funding round for a startup this year.

The new round will consist entirely of primary capital, meaning the funds will be invested in exchange for equity in the company. This differs from secondary capital, where shares are simply transferred between investors.

Zepto was initially valued at $4.6 billion, but sources reveal that the company is now being offered a valuation of $5 billion. With the new funds, Zepto's total funding has exceeded $1.6 billion, with $1 billion raised in the past 50-60 days alone. The company's valuation has soared from $1.4 billion in August 2023 to $5 billion in August 2024 due to successive fundraises.

An investor explained that the company is raising money because capital is readily available at the moment. They noted that the market can change rapidly, so Zepto is taking advantage of the opportunity to secure funding while it can.

The investment arrives as Silicon Valley-based General Catalyst nears the completion of a $6 billion fund and has disclosed plans to invest between $500 million and $1 billion in India in the coming years.

For a company like Zepto, which has achieved $1.2 billion in gross merchandise value (GMV), amassing a substantial cash reserve is prudent, given the competition from major players like Zomato, Swiggy, Walmart, Reliance, and the Tatas.

Competitive pressure is rising as Flipkart launches Flipkart Minutes to maintain its market share in e-commerce. Quick commerce has evolved from a nice-to-have to an essential sector, now valued at $5 billion.

Aadit Palicha said,"We are at the same stage Amazon was in the late 90s and early 2000s. With the right macro conditions and business model, we have the potential to build something substantial. If we execute effectively, we could achieve a $50-80 billion outcome."

He also added that, to create a $50-80 billion company, you must take decisive action. Success hinges mainly on execution, and while it's not assured, there have been companies in the past with similar potential that faltered due to poor execution.