How Startups Raise Money: the Zepto story

A Quick Overview

This post aims to explain how startups raise funding in a step-by-step (aka round-by-round) manner. The same can be understood by following the fundraising journey of one of India’s most prominent quick-commerce startups – Zepto. Founded in 2021 by two 19-year-old Stanford dropouts Aadit Palicha and Kaivalya Vohra, Zepto has scaled to 1.7 million daily orders and manages a network of over 950 high-efficiency dark stores. On the financial front, the company is currently valued at around $7 billion and eyes a Rs. 11,000 crore IPO in the July-September window of 2026.

One way in which we are all taught to look for money when in need is a bank loan. But banks require collateral, a guarantor or track record to offer any kind of credit, and a startup would naturally not have any of these. This is when investors step in. Their ask? Ownership rather than interest. Well yes, a business can be bootstrapped, some money can be raised from friends or family, but building and scaling something requires patient capital.

Every now and then, we keep hearing that a X startup raised Y million dollars from a Z firm at so-and-so valuation. Fundraising in today’s business environment is a structured pathway where various investors are ready to deploy capital in businesses at different junctures of their journey. This money can come from UHNIs, family offices, pension funds or other such institutions.

One such startup was Zepto, which started during Covid as KiranaKart as a WhatsApp service to deliver groceries from the kirana store to your house. Well between that day in 2020 and today, a LOT has changed. They rebranded, not only the name but also the modus operandi. Whether it be pioneering operational excellence (dark stores, logistics, algorithms and LLM adoption) or diversifying revenue streams (Product Sales, Zepto Ads, Zepto Pass), the company has continuously invested and cruised through a high-speed scaling journey. This speed also came with a significant growth in burn rate, which was supported by multiple rounds of fundraising.

The below timeline displays Zepto’s fund raise journey : from KiranaKart to a $ 7 Billion mammoth.

The timeline tells us when Zepto raised money and how much it raised. To understand why different investors entered at different stages, we first need to understand what each funding round represents.

1. Pre-Seed Funding

The absolute earliest stage of startup fundraising, where founders secure capital to transform an initial business idea into a working product (MVP), hire an initial team, and test whether the idea works.

At Zepto

It was still operating as KiranaKart, both founders were just 19 years old and the 10-minute model which would later become Zepto had not yet emerged. Investors were effectively backing the founders and their conviction rather than a proven business.

What this tells us

At pre-seed stage, investors predominantly evaluate the founders and the conviction to build rather than numbers. There is often very little or no financial information or historical data to back this investment decision. The addressable market, product market fit and general business opportunity are blurry, making these investments highly risky. Well, most startup investments fail, but a small number generate enormous returns.

2. Series A

The first major institutional round, raised once a startup has a working product and early signs of traction — actual users, repeat behaviour, or revenue, even if small. The capital is meant to help the company find a scalable, repeatable model, not just prove an idea works.

At Zepto:

The company had transitioned from a third-party inventory model to a centralised dark-store model to achieve the 10-minute delivery goal, which was beginning to show early traction in Mumbai. This was enough for Glade Brook Capital, Nexus Venture Partners, Y Combinator, and Lachy Groom to come in with $60 million at a $225 million valuation. In an interview with Y Combinator, Aadit Palecha revealed how an 8 minute conversation with one of the YC partners transformed their perspective from seeing it as just a hobby or fun project to realizing it could be an actual startup.

What this tells us

The methodology for evaluation in Series A is different. Rather than “Do we believe in these founders?”, the question becomes “does the early data suggest this could become a real business?” So this bet is upon the possibility of a newly established business model to scale. For Zepto, that meant going from a handful of dark stores in Mumbai to a network that could possibly work across multiple cities.

3. Series C and D

Once a company has shown that its model works in one market, the next rounds are about proving it can be repeated — more cities, more volume, more infrastructure. These rounds often happen in quick succession when growth is strong, and are frequently led by the same investors who backed the company earlier, rather than entirely new names.

At Zepto

Just two months after Series A, the startup raised $100 million in Series C (Dec 2021) at a $570 million valuation, more than doubling its valuation in eight weeks. Series D followed five months later (May 2022) brought in another $200 million at a $900 million valuation. Both rounds were led by the same group: Y Combinator, Kaiser Permanente, Nexus Venture Partners, Glade Brook Capital, and Lachy Groom.

(P.s. Companies sometimes skip a letter, often because an earlier bridge round informally “used up” the B label, and what matters is the stage, not the alphabet.)

What this tells us

One might observe that these are follow-on investments by the series-A backers themselves. For Zepto, this period (late 2021 to mid-2022) was about expanding the dark-store network to more Indian cities and proving that the Mumbai playbook could be copied elsewhere. The increase in valuation was not because of any change in business model, but because the investors willing to bet bigger on a model that worked faster than expected.

4. Series E

Series E rounds typically happen when a company has moved well past “proving the model” and is now scaling aggressively across a large market. This is also often the stage where a company crosses a symbolic threshold, most commonly, the $1 billion valuation mark, earning it “unicorn” status. New investors at this stage tend to be larger, more institutional players who weren’t part of the early conviction-based bets.

At Zepto

In August 2023, Zepto raised $200 million at a $1.4 billion valuation making it India’s first unicorn of that year. The round was led by StepStone Group, a US-based asset management firm making its first investment in Zepto, joined by Goodwater Capital, also a new entrant. The existing backers, namely Nexus, Glade Brook, and Lachy Groom also participated.

Mind you, 2023 was one of the tough years to raise funds in India (often describes as the peak of the ‘funding winter’). Zepto and InCred were the only 2 startups to become unicorns that year, as compared to 23 and 44 unicorns in 2022 and 2021 respectively. Aadit himself described the process of reaching unicorn status as a “fundraiser from hell”.

5. Series F, G, and the G-extension

By this stage, a company is no longer trying to prove that its model works, it’s trying to win outright before competitors can catch up, while also positioning itself for an eventual IPO. Rounds at this stage tend to be large, frequent, and increasingly driven by strategic considerations beyond just “growth capital”, including building a domestic shareholder base if the company plans to list on local exchanges.

At Zepto

Things move so fast. Zepto raised $665 million in Series F at a $3.6 billion valuation, more than doubling its valuation from Series E in under a year, with Lightspeed Venture Partners, Avenir Growth, and Avra all entering as new investors. Just two months later, Series G (August 2024) brought in another $340 million at a $5 billion valuation, led by General Catalyst. Then, in November 2024, a Series G-extension added $350 million, at the same $5 billion valuation, led by Motilal Oswal’s Private Wealth division, with participation from Indian family offices (Mankind Pharma, RP-Sanjiv Goenka, Haldiram’s) and even individuals like Sachin Tendulkar and Amitabh Bachchan.

What this tells us

Series F & G, a classic late-stage growth story. Capital goes towards winning the Q-commerce war against Blinkit and Instamart. But the G-extension might mean something completely different, there was no change in valuation, what changes were the category of investors. An explicit domestic investor-base before a potential public listing, because regulations and investor sentiments favour companies with meaningful local ownership. Wealth managers, family offices and celebrities, this signalled that Zepto was no longer a venture bet, it was an institutional asset class. An asset that India’s wealthy were buying into.

6. Series H

The final private round before an IPO is often less about the company needing the money and more about strengthening the cap table and signalling credibility to public market investors. At this stage, the kind of investor that shows up matters as much as the cheque size: large, conservative institutional capital entering at this point tells the market “this company is ready to be a public stock.”

At Zepto

In October 2025, Zepto raised $450 million at a $7 billion valuation in its Series H round, its highest valuation yet, just months ahead of its planned IPO. The round was led by CalPERS : the California Public Employees’ Retirement System, the largest public pension fund in the United States (alongside continued participation from General Catalyst, Lightspeed, Avenir, Avra, Nexus, and Glade Brook).

What this tells us

CalPERS is not a venture fund, it manages retirement savings of for California Government employees. These funds are built around a conservative approach, not on high-risk bets. This investment predominantly signalled that Zepto’s business is now being underwritten with the same lens that public market investors will eventually use.

Also worth noticing that there were repeated follow-on investments from investors who entered across Series A through Series G, right up to the round before listing. When the company goes public, these early backers will be the investors whose returns the IPO is meant to realise.

7. The IPO – Where the story comes full circle

An Initial Public Offering is the point where a private company’s shares become available to the public for the first time. For early investors, it’s typically the moment that turns paper gains into real, liquid returns — they can finally sell some or all of their stake. An IPO usually has two components: a “fresh issue,” where the company sells new shares and raises capital for itself, and an “offer for sale” (OFS), where existing shareholders (investors and sometimes founders) sell their existing shares to the public.

At Zepto

With this IPO, Zepto is poised to become the only public pure-play quick commerce players in the country. Its updated draft red herring prospectus, filed with SEBI on 8th June 2026, confirms the structure of its IPO: a fresh issue of ₹ 8,010 crore, plus an OFS of up to 11.34 crore equity shares, taking the total issue size to roughly ₹10,000–12,000 crore, with a dual listing planned on the BSE and NSE. The OFS sellers are early institutional backers: Nexus Venture Partners (through two of its fund entities), Contrary Capital, Razor Ventures, and Kaiser Permanente’s investment arms (several of whom first wrote cheques at Series A in 2021 at a $225 million valuation). Notably, founders Aadit Palicha and Kaivalya Vohra are not selling any shares in this round and their stake would remain untouched.

What this tells us:

Every round that we walked through was, in a sense, building towards this single event. This is the moment where the earliest backers who believed in the company through the initial cheques all the way till today through multiple follow-on watch a wild thesis turn into a public market reality. It marks the transition of Zepto from a gritty, hyper-growth startup into an institutional mainstay…

The founders still having skin in the game is also a signal, one that tell public investors that there is scope for further value accretion. This public perception and trust matter a lot, because valuations and investor sentiments in public markets are driven by existence and expectations of cash flows, growth and profitability.

For a company that promises quick delivery, it is almost poetic to grow at such a quick pace.

For Zepto, the private hyper-growth sprint ends here. What begins is a public marathon for profitability.