Zepto Targets $700 Million Private Funding as IPO Pushed to 2026 Amid Cash Burn

Quick commerce unicorn Zepto has officially pushed its initial public offering (IPO) plans to calendar year 2026, delaying its market debut by at least a year from its earlier projection of 2025. Despite earlier public confidence from CEO Aadit Palicha about a 2025 listing, sources have now confirmed that Zepto is shifting its focus towards stabilizing operations and reducing its rising cash burn, which at its peak during the January–February period surged to $60-70 million, nearly double the burn seen in late 2024.

Highlights:

• Zepto’s IPO now expected in 2026, despite earlier 2025 projection.

• Key reasons: rising operational losses, cash burn, and missed Q4FY25 targets.

• Burn rate peaked at $60–70 million amid competition from Swiggy, Blinkit.

• Public market investors demand profitability before entry.

Term Sheets from Avenir, General Catalyst as Zepto Plans Private Round

In the absence of public market funding, Zepto is now exploring a massive private funding round of up to $700 million, with term sheets already in place from Avenir Growth and General Catalyst, both existing backers. CEO Palicha has reportedly been in the United States over recent weeks to hold strategic discussions with foreign investors. The round is still in flux, with uncertainty depending on market conditions and investor appetite for a high-burn quick commerce model.

Highlights:

• Zepto in talks for $700 million private fundraise.

• Term sheets from Avenir Growth and General Catalyst received.

• Capital needed to fend off rivals and reduce dependence on public markets.

• Round not yet finalized; contingent on market dynamics.

High Fixed Costs, Regulatory Issues, and Operational Disruptions Mount

Zepto is also grappling with increased fixed costs, notably Rs 100 crore/month in salaries, which is disproportionately high compared to rivals like Swiggy and Blinkit. Additionally, operations have been disrupted in Delhi NCR, where Zepto Café paused 44 stores, and Maharashtra, where FDA regulatory action has suspended services in Dharavi. Delivery partner strikes in Hyderabad have further strained operations, intensifying investor caution.

Highlights:

• Fixed salary cost of Rs 100 crore monthly—60–90% of rivals’ despite fewer staff.

• Zepto Café suspends 44 stores in Delhi NCR.

• FDA action halts Dharavi operations; rider strikes hit Hyderabad network.

• Regulatory and labour challenges compound financial strain.

IPO Syndicate Finalized; Domestic Ownership Grows Ahead of 2026 Listing

Despite the IPO delay, Zepto is completing its IPO syndicate, with JM Financial and Motilal Oswal recently added to the banking team. The firm now plans to raise $800 million through its IPO, an increase from its previous $400–500 million target. Meanwhile, domestic ownership of the company has grown to 43–44%, bolstering Zepto’s confidence in achieving majority Indian ownership before the IPO, which could help it sidestep foreign control concerns amid geopolitical scrutiny.

Highlights:

• IPO syndicate includes JM Financial and Motilal Oswal.

• Target IPO raise revised upward to $800 million.

• Domestic shareholders now hold ~44%; target is majority Indian ownership.

• Strategic move to align with public listing norms and valuation goals.

Market Dynamics and Competitor Performance Pressuring Valuation Outlook

Internally, CEO Palicha is cautious about going public while rivals struggle. Swiggy, for instance, has seen its share price drop 38% YTD, dragging its market cap down to $10 billion from over $18 billion. Eternal (Zomato), by contrast, is up 12% YTD, buoyed by eight consecutive profitable quarters. This divergence is reinforcing the need for Zepto to achieve profit-led growth, as public market investors are benchmarking against profitable incumbents.

Highlights:

• Swiggy shares down 38% YTD due to mounting losses.

• Eternal (Zomato) shares up 12%—eight straight profitable quarters.

• Zepto fears IPO at depressed valuation if rivals underperform.

• Profitability now a pre-requisite for public market comfort.