News Startups

Zomato gets $50 million from existing investors Info Edge, but will it be enough ?

zomato
Share on Facebook
Tweet about this on TwitterShare on Google+Share on StumbleUponShare on LinkedInPin on PinterestShare on Reddit

Ever since UrbanSpoon happened, Zomato has been in need of cash. The restaurant discovery platform  made as many as seven acquisition in past one year, surging its way into Europe and the U.S. But that surge was powered by cash, and lots of it.

Quite a lot of that cash was spent in one of the biggest foreign acquisitions by an Indian startup, the $52 Million UrbanSpoon deal. But then, as Zomato spent resources to power its way up the ladder, it did not receive resources at the same rate. The company has been busy talking to investors, with a Reuters report saying that $100 million was on the cards. It hasn’t really materialised as of now though.

Cash has come, however only half of what Zomato requires. The company has now raised a fresh $50 million round, led by existing investor – Info Edge India, with participation from a few individual investors. However, InfoEdge itself has invested half of the total funding to retain its majority shareholding of 50.1 per-cent it had earlier.

This latest round of funding takes Zomato’s total funding to over $163 million. Recently, about five months ago, the company raised $60 million round which was led by Info Edge and Vy Capital with participation of Sequoia Capital. But as you are well aware, almost all of it was spent in acquiring UrbanSpoon.

Upon completion of the current round and allotment of shares, Info Edge’s aggregate investment in Zomato will be about Rs. 484 crore.

While funding has arrived, it isn’t enough for Zomato to expand at the same rate as it has been expanding for quite some time.  The company is looking to expand into related businesses and also wants to allow customers to order food directly through its website. But there are competitors, and they are big names, and an empty war chest is the last thing Zomato wants to go along with. It will compete against the likes of heavily funded FoodPanda which recently acquired Just Eat India and TastyKhana. TinyOwl is also an active player in this space, though it is highly India-centric as of now.

While food delivery is still under development, Zomato already has worries in its own restaurant discovery domain. While the company did gain substantial global market share through its acquisitions, it still faces stiff competition from the NYSE listed Yelp, which continues to expand aggressively in newer markets.

As for financials, Zomato has strong numbers when we look at operating revenues. Zomato’s operating revenues for the year ended March 31, 2014, almost tripled to Rs 30.6 crore over the previous year. But then, its losses have seen an even stronger growth, widening at a four-fold pace to stand at Rs 41.28 crore from Rs 10.03 crore in the same period.

Zomato recently found a new rival in Ola Cafe, a food delivery service started by taxi-hailing app Ola Cabs, and which has already seen a rapid adaption in cities where it has been launched.

While Zomato has been one of the biggest Indian success stores when we talk about a global stage, the company needs cash to sustain that growth. We’ll have to wait and watch as to how the entire thing plays out. Meanwhile, we’ve emailed Zomato for details regarding the current round, and will update once we receive a response.


 

Editor-at-large and co-founder at The Tech Portal. He is a tech enthusiast with interests in new-age technology fields like Ai, Machine Learning, AR/VR, Outer Space and related stuff. Drop him a mail anytime, very reachable.


Add Comment

Click here to post a comment

Your email address will not be published. Required fields are marked *