Gurugram-based foodtech company Zomato is reportedly in talks to raise a fresh funding round of $500 Mn to $1 Bn from Chinese private equity major Primavera Capital and Alibaba payments affiliate Ant Financial, along with other investors.
A media report citing sources familiar with the development said that the Primavera may invest about $200 Mn (INR 1392.5 Cr) in the upcoming round while the remaining amount could come from existing backer Ant Financial.
A Zomato representative reportedly said, “There is a new round that we are talking to potential investors (including Ant Financial) for our new fundraise. This will be at a premium to the last round as the company has more than doubled in size since the last round was finalised.”
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Zomato, which is caught in a two-horse race with rival Swiggy to dominate the online food and restaurant business, has been in talks with major investors for fresh funding in 2018. However, Swiggy raised the stakes when it raised a $1 Bn funding in December 2018 led by South African tech investor Naspers.
“Zomato had not anticipated Swiggy to raise $1 Bn, it was more on the lines of $600 Mn in primary money that they thought would come into the firm. This has made them recalibrate their new financing so that they can continue to fight Swiggy,” the report added.
In 2018, Zomato raised two tranches: $200 Mn (INR 1392.5 Cr) led by Ant Financial in February and $210 Mn (INR 1462 Cr) from Alibaba’s digital payments subsidiary Alipay in October. With $1Bn in annual gross merchandise value, the decade-old company recorded a 40% growth in its revenue for FY18 and targeted expansion to 100 cities across India.
Zomato also achieved 21 Mn monthly delivery orders and 2.4 Mn users last year. However, it grabbed the headlines for the wrong reason last year when a video of one of its delivery executives on a bike eating out of food packets meant for delivery went viral. The company did its best to control the social media uproar, announced plans to launch tamper-proof tapes on its food boxes, and fired the delivery person.
With the online food delivery market estimated to be worth $19 Bn at present, Zomato’s newfound urgency to raise funds has shown that it will not back down from Swiggy’s challenge. Meanwhile, emerging food delivery players like UberEATS and Foodpanda have also drawn up plans to make their presence felt in the rapidly-growing food delivery market.
[The development was reported by ET.]