- Zomato raised $600 million in Series J round two months ago.
- The company is valued at $5.4 billion after the latest fundraising round.
- Info Edge, Kora, Fidelity, Tiger Global invested in Zomato.
Two months ago Zomato closed a $660 million Series J funding round. Zomato has raised another $250 million. Meanwhile, the Indian food delivery start-up builds a war chest ahead of Zomato’s IPO later this year. The new capital was pumped into the 12-year-old Gurgaon-based startup, Info Edge. It is a publicly listed investor in Zomato. Kora contributed $115 million while Fidelity invested $55 million. Tiger Global also added $50 million to the deal. Bow Wave ($20 million) and Dragoneer ($10 million) also participated. The new investment gives Zomato a $5.4 billion post-money valuation. It is up from $3.9 billion last year in December, said Info Edge, which holds an 18.4 percent stake in the Indian start-up.
The new investment reinforces the strong confidence of investors in Zomato, which for much of last year struggled to raise money. Zomato, which acquired Uber’s Indian food delivery company early last year, is competing in India with Prosus Ventures-backed Swiggy (valued at around $3.6 billion). They work together with more than 440,000 delivery partners, a larger workforce than that employed by the Department of Posts of India.
Previous Fundings
In a financing round that it launched last year, Zomato raised $660 million as the Indian food delivery company prepares to go public next year. Tiger Global, Kora, Luxor, Fidelity (FMR), D1 Capital, Baillie Gifford, Mirae, and Steadview have participated in the Series J round, which gives Zomato a $3.9 billion post-money valuation. As part of a Series J round from Ant Financial, Tiger Global, Baillie Gifford, and Temasek, Zomato had previously disclosed fundraising of about $212 million.
Originally, the start-up expected to close a round of about $600 million by January of this year. But several barriers, including the current pandemic, postponed the fundraising effort. Furthermore, Zomato’s investor Info Edge revealed earlier this year that Ant Financial only delivered a third of its deal. It had originally committed to invest $150 million in this round.
With Prosus Ventures-backed Swiggy in India, the Gurgaon-headquartered startup, which acquired Uber’s Indian food delivery business earlier this year, competes. A third player, Amazon, has also emerged on the market, although its food delivery service is currently offered in only parts of Bangalore. India’s food delivery market is at stake, which Bernstein analysts expect to balloon to be worth $12 billion by 2022, they wrote in a TechCrunch-accessed customer report. Zomato is the current leader amongst the three, Bernstein analysts wrote, with about 50 percent of the market share.
Effect of the pandemic on food-delivery services
To improve its finances and handle the coronavirus pandemic, Zomato cut hundreds of jobs this year. This affected the food delivery sector in India significantly in the early months. Goyal said the food delivery market is rapidly emerging from the shadows of COVID-19. The highest GMV month in our history is predicted to be December 2020.
In September, Goyal told employees that Zomato was working for “sometime in the first half of next year” for its IPO and was raising money to create a war chest for “future M&A, and to fight any mischief or price wars from our competition in different areas of our company.”
Amazon’s arrival in the food industry
Last year, a third player, Amazon, also entered India’s food distribution market. Although, its operations are still restricted to parts of Bangalore. India’s food distribution market is at risk, which Bernstein analysts expect to balloon to be worth $12 billion by 2022, they wrote to customers in a survey. Zomato is the current leader of the three, Bernstein analysts wrote, with around 50 percent of the market share.
In recent years, Zomato and Swiggy have strengthened their finances. It is particularly impressive since making money from food distribution is very often more difficult in India. A comparable item carries a price tag of $3 to $4 in India. But, in western markets such as the U.S., the value of each delivery item is around $33. Last year, both start-ups lost hundreds of workers when the coronavirus pandemic affected their companies. Deepinder Goyal is the co-founder and chief executive of Zomato. The food delivery industry was “quickly coming out of the shadows of COVID-19,” he said in an interview.
