Bikhchandani listed three critical points behind the decision to invest in Zomato – founder Goyal, Zomato’s team, and the startup’s potential to create a category
The investor said that there are periodic discussions at Info Edge board about the company’s stake in Zomato but it is in favour of staying invested in the startup for long
Bikhchandani is bullish on Zomato's recent acquisition of Paytm's online ticketing business
Explaining Info Edge’s rationale behind investing in Zomato
in 2010, the Naukri.com parent’s cofounder Sanjeev Bikhchandani said that the startup’s founder Deepinder Goyal was one of the reasons behind the investment.
During a discussion with Inc42 cofounder and CEO Vaibhav Vardhan at Money X, Bikhchandani listed three critical points behind the decision to invest in Zomato – founder Goyal, Zomato’s team, and the startup’s potential to create a category.
It is pertinent to note that Info Edge backed Zomato in 2010 in its seed round by investing $1 Mn. Info Edge still holds over 13% stake in the foodtech giant.
Bikhchandani said that there are periodic discussions at Info Edge board about the company’s stake in Zomato. However, as a result of the big gains given by Zomato over the last year or so, the company’s board is in favour of staying invested in the startup.
Giving examples of Zomato and PB Fintech (in which Info Edge invested in 2008), Bikhchandani said it is important to be patient with early-stage startups.
The statement comes amid Zomato’s extended bull run on the bourses, with the stock recently soaring to an all-time high of INR 298.20.
Zomato made its public market debut in July 2021, getting listed at INR 116, a 53% premium to its IPO price of INR 76. Over the next year, the stock crashed and market cap declined from INR 98,221 Cr ($14 Bn) to INR 42,478 Cr ($5 Bn), well below its last private valuation of $5.4 Bn.
Meanwhile, the acquisition of quick commerce startup Blinkit also raised several eyebrows.
However, Zomato has been able to turn around the fortunes of Blinkit and the quick commerce startup has emerged as one of the big revenue drivers for the foodtech giant. In the first quarter of financial year 2024-25 (Q1 FY25), Blinkit’s operating revenue jumped about 2.5X YoY and 22% QoQ to INR 942 Cr.
Its adjusted EBITDA loss also improved to INR 3 Cr in Q1 FY25 from INR 133 Cr in the year-ago quarter and INR 37 Cr in the preceding March quarter.
Commending Blinkit’s turnaround, Bikhchandani said, “What Zomato has done when it comes to scaling up Blinkit profitably is extremely amazing. When the company was acquiring the loss making quick commerce startup, the board as well as the market was extremely doubtful of the acquisition. However, Deepinder (founder) saw a window of opportunity in the space and we backed his confidence.”
Bikhchandani is also bullish on Zomato’s recent acquisition of Paytm’s online ticketing business. He asserted confidence in the startup’s ability in scaling that business as well. “Zomato will make it, so will Policybazaar and our other investments,” he said.
Zomato announced the acquisition of the entertainment and ticketing business of Paytm for INR 2,048 Cr in August. With the acquisition, the startup is looking to scale up its going out vertical with the launch of its new app ‘District’.
