How VCs are Reworking the Quick Commerce Thesis

Vertical quick commerce is emerging as one of the clearest signals that venture capital is rethinking the fundamentals of India’s consumer internet story. After years of backing horizontal platforms built on speed and scale, investors are now directing capital toward a more focused model where category depth, supply-chain control and unit economics appear to be central to the investment thesis. 

According to the recent India Venture Capital Report by Bain & Company, funding in vertical Q-commerce rose sharply from about $8 million in 2024 to roughly $150 million in 2025, with over 20 companies raising capital and the segment accounting for around a quarter of overall quick commerce funding.

This shift marks a clear departure from the earlier phase of quick commerce, where growth was driven by horizontal expansion across categories. The report notes that consumer tech funding has moved into a more measured phase, with fewer large deals and a stronger tilt toward verticalized platforms offering curated assortments and tighter supply chains in categories such as fashion, food and baby care.

But at the heart of this transition, there appears to be a change in how investors are defining value in the segment, where the earlier assumption that delivery speed and network density would eventually improve margins is being reassessed. “The first phase of quick commerce was driven by horizontal scale, with the belief that density and frequency would eventually improve margins, but that assumption has weakened,” says Apoorva Ranjan Sharma, co-founder and president at Venture Catalysts. “Quick commerce is now seen as just an enabler, not a core value proposition.”

Rewriting the model

The move toward vertical Q-commerce reflects a structural difference in how these businesses operate. Horizontal platforms are designed for breadth, carrying a wide range of products and competing heavily on price, which naturally compresses margins and increases operational complexity. Vertical platforms, by contrast, focus on narrower categories where demand patterns, pricing and inventory can be managed more tightly, according to experts. 

Bain’s data indicates that this model is gaining traction across the ecosystem. According to the report, B2C commerce deal volumes increased from roughly 30 to 60 between 2024 and 2025, driven largely by Q-commerce, particularly vertical models. 

The economics behind this shift are also becoming clearer. Bain highlights that category-focused platforms can deliver stronger operating metrics, including higher basket sizes. In apparel, for instance, vertical Q-commerce platforms are seeing 1.5x to 2x higher average order values compared to horizontal players.

“It is genuinely a better economic model, but only if you execute the vertical correctly,” says Chetan Mehta, founding partner at AUM Ventures. He adds that horizontal platforms “fight a permanent unit economics war” due to high SKU counts and thin margins, while vertical businesses can build “higher basket sizes, stronger recurrence and lower acquisition costs” when category dynamics are favourable.

The change is also visible in how investors think about defensibility. “For a long time, quick commerce attracted capital on the strength of speed alone. That consensus has broken,” Mehta says. “Vertical models offer category ownership, repeat purchase density and pricing latitude. The category becomes the moat.”

The metrics that matter now

The evolution in the model has been accompanied by a sharper focus on operating discipline. Investors are no longer prioritising scale at the expense of profitability. Instead, they are evaluating whether the business can demonstrate sustainable unit economics early in its lifecycle.

Sharma says investors now expect gross margins above 35%, along with clear visibility on improving contribution margins. He also points to the importance of repeat behaviour and tighter assortments, which enable better inventory management and lower waste.

Mehta outlines a similar framework, focusing on order-level contribution margins, repeat purchase rates and customer acquisition payback. He notes that a 30-day repurchase rate above 40% and payback periods below 12 months are key indicators of a viable model.

Somdutta Singh, an e-commerce expert and founder of Assiduus Global, says investors are also tracking basket sizes and the trajectory toward contribution-margin break-even. “The shift is essentially from scale-first thinking to backing models where growth and economics are more aligned from the start,” she says.

Her observations on consumer trends support this view. Non-grocery categories are expanding faster than grocery in quick commerce, while higher-margin segments such as beauty, electronics and fashion now account for 20–25% of gross sales, up from under 10% earlier.

Returns, timelines and risks

While investor interest has strengthened, expectations around timelines and outcomes have also become more realistic. Sharma says it typically takes six to eight years to build a scalable multi-city vertical Q-commerce business with stable unit economics, with meaningful exits taking longer. 

On returns, investors are looking at multiple possibilities. According to experts, exit outcomes are expected to come from a mix of strategic acquisitions and public market listings, with consolidation likely as larger platforms seek to strengthen category presence. 

Acquisitions are increasingly seen as a natural outcome in this domain by VCs, given that horizontal platforms have built delivery infrastructure but lack depth in specific categories. “The large horizontal platforms… own delivery, but they do not own categories,” says Mehta, adding that a vertical player with strong category ownership becomes difficult to replicate and therefore a logical acquisition target.

But even as investor interest is building, the underlying investment thesis remains closely tied to category fundamentals and execution discipline. VCs say the model works best in segments with inherent pricing power, stronger gross margins and the ability to differentiate beyond speed, making category selection critical from the outset. Categories with infrequent or seasonal demand can weaken the economics, limiting repeat behaviour and long-term viability. 

To take care of that scaling discipline will be crucial, with companies needing to balance expansion with operational efficiency so that growth does not come at the cost of sustainable unit economics.