Gurugram-headquartered foodtech unicorn Zomato is now testing its investors’ kitchen as the company looks to seek growth capital.
An ET report. citing people aware of the development, said that Zomato is finalising a $600 Mn funding round led by Ant Financial. The round is speculated to see participation from Temasek as well as other existing investors. The report said that few hedge funds may invest about $150 Mn-$200 Mn as well.
The report speculated that the company may be valued at $3 Bn, a major jump over the company’s last valuation of $2 Bn in the funding round this year. A Zomato spokesperson reportedly said, “We are raising a round to fuel our ambitions in food delivery, dining out and sustainability. However, at this stage we cannot disclose any further details.”
After a boastful start to the year with fresh funding, new products and expansion plans, the last few months for Zomato have been tumultuous. Though the controversies, which started from a “food-is-food” tweet, expanded to its membership plans and restaurants as well as delivery partners started protesting, the company didn’t lose its spirit.
In terms of numbers, Zomato recorded a 225% rise in revenue in the first half of FY2020. According to the company’s biannual report, it has registered $205 Mn in revenue, compared to $63 Mn in the first half of last year.
The report also mentioned that there has been a 40% decline in Zomato’s EBITDA (earnings before interest, tax, depreciation and amortization) loss from March to September 2019. The company has also pointed out that its monthly burn rate, which measures the rate at which a company is losing money, is down by 60%.
In August 2019, during the #logout campaign, the restaurants listed on the food aggregator had called out Zomato for eating into their margins through Gold and Infinity Dining feature, which provided heavy discounts. The restaurant association had highlighted issues such as “unreasonably high commissions, payment terms and arbitrarily applied additional charges” that restaurants have been charged to be a part of Zomato Gold.
After #logout campaign, discontinuing infinity dining service, altering rules and extending the benefits of Zomato Gold, and multiple rounds of layoffs, the company witnessed protests from delivery partners.
Despite facing issues with the restaurant partners, Zomato claimed to have registered an increase of 177% of restaurant partners after getting an additional 73K restaurants on board. In the H1FY20, the food aggregator and delivery startup has around 119K restaurants, compared to 43K last year.
The controversial Zomato Gold service has registered a 180% increase with 1.4 Mn users. With an eventful FY20, Zomato’s rival Swiggy has also been out on the block seeking fresh funds. The Bengaluru-based food delivery unicorn is also in talks to raise $500 Mn fresh funds led by Naspers at a valuation of $3.3 Bn.
Update: October 4, 2019| 9: 47 AM
A previous version of this story erroneously mentioned that Zomato raised $600 Mn funding from Ant Financial. Inc42 regrets the error and the article has been updated to reflect the change.