US-based investor Tiger Global has shown significant interest in Zepto, a quick commerce startup that has quickly risen in valuation to $5 billion. This interest is underscored by Tiger Global conducting due diligence at Zepto’s dark stores in Bengaluru—a crucial step that signals the investment firm’s plans for future funding. Zepto, on the other hand, is preparing for an initial public offering (IPO) next year to capitalize on India’s rapid growth in the quick commerce market.
“Tiger Global has been visiting Zepto’s dark stores for a more detailed understanding of its operations,” said a source familiar with the developments. This assessment aims to determine Zepto’s operational differentiation from its competitors and how it is adapting to the Indian market, which has its own set of unique dynamics compared to the global market. Tiger Global’s exploration suggests it sees Zepto as a long-term opportunity in the rapidly evolving landscape of Indian commerce.
Tiger Global and Zepto’s IPO Plans
Zepto is reportedly in advanced discussions with merchant bankers about launching an IPO next year, which would help it leverage India’s growing appetite for quick commerce. Tiger Global’s involvement at this stage is likely part of an effort to foster a strong relationship with Zepto in advance of a potential funding round before the IPO. This approach is typical for late-stage startups that are looking to solidify their finances and investor backing before going public.
Although Zepto has not officially launched a new round of funding, it has been engaging with various interested parties regarding a possible pre-IPO round. According to another source, Zepto is fully aware of the external due diligence currently underway, and discussions between the company and potential investors have covered financial metrics and the startup’s current status. Tiger Global is not the only player involved; Zepto has also been engaging with crossover funds, which usually invest in companies shortly before their IPO.
Zepto’s CEO Aadit Palicha declined to comment on these developments, and Tiger Global did not respond to inquiries. However, the signals are clear that Zepto is gearing up for an exciting year ahead, with Tiger Global poised to play a pivotal role in its growth journey.
India’s Red-Hot Quick Commerce Boom and Tiger Global’s Strategy
India’s quick commerce sector has captured significant global attention, particularly because it is growing much faster than anticipated. Zepto, a key player in this market, aims to challenge the market leadership of Zomato-owned Blinkit. Meanwhile, Swiggy Instamart has also made substantial investments in its quick commerce offerings, and Tata-owned BigBasket has shifted its focus entirely to this segment. Walmart-owned Flipkart is scaling up its operations as well, adding to the competitive intensity in the market.
The surge in funding into India’s quick commerce space is attributed to the lack of success in similar ventures globally, which has led to significant consolidation, market exits, and downsizing in other regions. For instance, Tiger Global has also invested in Turkey’s Getir, a quick commerce company that recently exited the U.S. and U.K. markets to focus on its home turf. Getir’s valuation plummeted from $12 billion to approximately $2.5 billion following layoffs, and the company has even explored a merger with German rival Flink, as reported by Bloomberg. The struggles of Getir stand in stark contrast to the momentum seen in India’s market.
India’s quick commerce market has emerged as an attractive proposition for investors. Swiggy is preparing for a public listing, and Zomato is already listed on the stock market. Among the leading players, Zepto presents an attractive investment opportunity due to its long-term growth plans and strong market potential, leading several prominent investors, including Tiger Global, to take a closer look at the sector.
Zepto’s recent funding efforts have added Mars Growth (via Dragon Fund) and General Catalyst to its cap table, and its valuation has increased 3.5 times in the past year. According to a report by CLSA, the quick commerce market is expected to grow from $3.8 billion in FY24 to a massive $78 billion by FY34, with a projected compound annual growth rate (CAGR) of 69% from FY24 to FY27.
Currently, Zomato’s Blinkit, Swiggy Instamart, and Zepto collectively hold over 90% of the quick commerce market share in India, with Blinkit leading at 39%, according to CLSA. JP Morgan’s report estimates Blinkit’s market share at around 40%, indicating robust competition in the sector.
Challenges and Future Growth Potential
Additions to dark stores or fulfillment centers are expected to accelerate as unit economics improve for major players like Blinkit and Zepto. According to JP Morgan, quick commerce now represents nearly half of India’s online grocery spending. Rapid delivery services have accounted for more than half of e-grocery purchases in the past six months, highlighting the increasing consumer demand for quick delivery solutions.
For the current financial year, Swiggy Instamart has a gross order value (GOV) run rate of $1.3 billion, compared to Blinkit’s $2 billion and Zepto’s $1.5 billion. These numbers underscore the strong consumer adoption and competitive positioning of the major players in India’s quick commerce market.
Beyond its interest in Zepto, Tiger Global is also investing in Meesho, contributing to a $500-million funding round that includes both primary and secondary share sales. However, Tiger Global has not made any other major investments in India recently, indicating a more selective approach in its investment strategy.
An executive from one of Tiger Global’s portfolio companies mentioned that most late-stage startups now report directly to Tiger Global founder Chase Coleman’s team, with operational support coming from executives based in Singapore. Notably, the firm has recently experienced some leadership changes, with partner Alex Cook, who worked closely with Indian startups, set to leave the firm. Scott Shleifer, co-founder of Tiger’s private equity investing arm, has already departed.
Tiger Global’s recent fundraise of $2.2 billion for its latest venture capital fund in April fell short of the initial $6 billion target. This development reflects a changing funding environment but does not deter Tiger Global from remaining one of the most aggressive investors in the Indian startup ecosystem, alongside SoftBank.
In summary, Tiger Global’s interest in Zepto signifies its confidence in India’s burgeoning quick commerce sector. By conducting due diligence and positioning itself as a key investor in Zepto ahead of its potential IPO, Tiger Global is setting the stage for further involvement in what promises to be a transformative growth story for the Indian startup. With competition heating up and market potential expanding, Tiger Global’s strategic moves in India will likely play a crucial role in shaping the future of the quick commerce landscape.
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