Online restaurant discovery and food ordering platform Zomato is reportedly gearing up for aggressive investments in food delivery and new businesses such as cloud kitchens.
This comes at a time when the company is seeking to raise fresh funds. As per two sources familiar to the development, Zomato has roped in Morgan Stanley to raise fresh funds.
As per an ET report, Zomato’s CEO Deepinder Goyal confirmed that the company has mandated Morgan Stanley. “We are raising this round to accelerate growth, we won’t die if we don’t raise capital,” said Goyal in an interview, while declining to comment on the round size, adding that it has about $30 Mn in the bank. “Investor interest in the last 2-3 months has been very high. We were planning to start fundraising in March-April next year, but given the inbound interest, it made sense to start now.”
In May 2016, HSBC Securities and Capital Markets in a detailed report, titled ‘India Internet – Lot of Growth but Slim Pickings’ raised concerns surrounding Zomato’s advertisement-heavy business model, growing competition in the food ordering space, and money-losing international operations for the lower valuation.
At that time Zomato disagreed with the brokerage firm’s negative view. Founder Deepinder Goyal came up with a detailed blog post titled Unicorn Or Not in which he spoke about Zomato’s GMV, ad sales profitability, and refuted arguments made by the report.