Tiger to catch Zepto?

US investor Tiger Global is conducting due diligence at Zepto’s dark stores in Bengaluru, signalling a strong interest in the startup now valued at $5 billion. Tiger Global, known for its early back in Flipkart, has been very selective with its investments globally, but the company seems to be focussing on the quick commerce space in India, according to an ET report.
Tiger Global is visiting Zepto’s dark stores to get a deep dive into the operations. According to ET sources, the New York-based firm wants to see how Zepto differentiates itself in execution from others and what are the unique factors at play in the Indian market vs. global markets.

IPO on the Cards
According to an ET report, Zepto is in advanced talks with merchant bankers for an IPO next year. Tiger Global wants to get into a deal with Zepto before the next funding round before the IPO, which is a common practice for late-stage startups.
Although Zepto has not started a new fund raise yet, it has spoken to multiple interested parties for a pre-IPO round. The company is also aware of the external diligence happening in the market, and conversations are around financials and the state of the business.

India’s quick commerce space is growing faster than expected, with Zepto challenging Zomato’s Blinkit for the top spot. Swiggy Instamart and Tata’s BigBasket are also investing heavily. Walmart’s Flipkart has entered the fray and is scaling up fast, as per the ET report.
Global vs. Local Dynamics
Heavy fund inflows into India’s quick commerce space are partly due to the failure of similar businesses globally, which has led to consolidation, exits, and business shutdowns. For instance, Turkey’s Getir, where Tiger Global is an investor, has exited US and UK markets to focus on its home market, and its valuation has dropped from $12 billion to around $2.5 billion.
India’s quick commerce market is expected to grow from $3.8 billion in FY24 to $78 billion by FY34, at a 69 percent CAGR from FY24 to FY27, according to CLSA. Zepto, along with Blinkit and Swiggy Instamart, has over 90 percent market share, with Blinkit leading at 39 percent.
Future Outlook
For this fiscal year, Swiggy Instamart has a gross order value run rate of $1.3 billion, Blinkit has over $2 billion, and Zepto has $1.5 billion. Dark stores and fulfilment centres will add up fast, and unit economics will start to work for top players like Blinkit and Zepto.
Along with Zepto, Tiger Global is also investing in Meesho in a $500 million round. The firm has raised $2.2 billion for its latest VC fund, out of its $6 billion target. Despite the recent change in leadership, Tiger Global is still one of the most active investors in the Indian startup space.