Zepto’s IPO filing reveals fast growth, bigger losses, and a valuation question nobody’s answered yet

Zepto, the Indian quick-commerce startup, has announced its intention to pursue an initial public offering (IPO) that could see its valuation soar to approximately $1 billion. This move positions one of Y Combinator’s standout investments outside the U.S. closer to entering the public markets. The recent filing provides insightful details about how Zepto plans to maintain its remarkable growth trajectory following the IPO. Notably, the startup reported a staggering 151% increase in advertising revenue year-over-year, reaching ₹16.4 billion (around $171 million) for fiscal 2026. This growth outpaced the company’s operating revenue, which increased by 104% to ₹115.5 billion (approximately $2.4 billion). While grocery delivery remains the heart of Zepto's business model, the surge in advertising revenue indicates a strategic pivot in its revenue generation approach, akin to Amazon's successful marketplace advertising strategy. Founded in 2021 by Stanford dropouts Aadit Palicha and Kaivalya Vohra, Zepto has swiftly risen to become one of India's leading startups in the competitive quick-commerce sector, vying against rivals like Zomato's Blinkit and Swiggy's Instamart. Recent months have seen intensified efforts from major players such as Amazon and Walmart-backed Flipkart in this space. Despite the fierce competition, Zepto has managed to grow its customer base and order volume significantly, processing over 640 million orders in fiscal 2026—almost double that of the previous year—while the number of annual transacting users climbed to nearly 48 million. As its network expanded to include 1,139 stores, the average number of orders per store also rose, indicating a healthy demand for its services. However, this rapid expansion comes with financial challenges. Zepto reported a net loss of ₹59.1 billion (approximately $617.36 million) for fiscal 2026, up from a loss of ₹47.0 billion (around $492.45 million) the previous year. The startup acknowledged in its filing the potential for continued losses and the possibility of not maintaining its previous growth rates, a common but significant disclosure for companies looking to attract public-market investors. To fund its IPO, Zepto aims to raise up to ₹80.1 billion (around $837.41 million) through new shares, along with an offer-for-sale of up to 113.5 million shares from current investors, including Nexus Venture Partners and Razor Ventures. Additionally, the startup is considering raising up to ₹16.02 billion (about $167 million) from investors in a pre-IPO placement. This listing is poised to be a crucial moment for Zepto’s early investors, especially as the startup was valued at $7 billion in its last funding round in October. Several key shareholders have chosen not to participate in the IPO’s offer-for-sale, opting to retain their stakes instead. This decision highlights the uncertainty surrounding Zepto’s public-market valuation, as some funds have indicated valuations that fall below the latest private round. The filing also disclosed that the founders were summoned by India’s anti-money laundering agency in April to provide information regarding foreign investments and the company's shareholding structure. Although they complied with the agency's requests, Zepto has warned that future inquiries cannot be ruled out. This planned IPO marks a significant milestone in Zepto’s journey, following its strategic decision to move its legal base from Singapore to India last year, reflecting a trend among startups eager to tap into the growing appeal of local public markets for tech listings.