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India’s food-tech market is getting a bit more spicy now. As the market matures and market penetration for food delivery services increases, India’s biggest players in the segment — spanning two different generations of entrepreneurs — are stocking up massive cash to accelerate growth.

While Swiggy recently announced a $1 billion Series H funding round led by South Africa-based Naspers, it’s rival Zomato is also planning to raise a new funding round, to the same tune of close to a billion dollars.

According to multiple media reports, Gurugram-based Zomato is in talks to raise a fresh funding round of $500 million to $1 billion from Chinese private equity major Primavera Capital and Alibaba payments affiliate Ant Financial, along with other investors.

Sources aware of the development have suggested that Primavera may invest about $200 million (approx. ₹1392.5 crore) in the upcoming round while the remaining amount could come from Ant Financials and other investors.

In response to Economic Times, a Zomato representative declined to comment on the specifics of new investors, but 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.

said a Zomato statement

For Zomato, the last couple of years have largely been about building a sustainable business with lesser focus on fund-raising. That does not, in any sense, mean that the company hasn’t received external capital. In the last fundraising activity by the company in October 2018, it was valued at $2 billion. However, at this time, it couldn’t be determined how much the company would be worth after this fresh round.

In 2018, Zomato raised about $410 million in two tranches: $200 million led by Ant Financial in February and $210 million from Alibaba’s digital payments subsidiary Alipay in October. For FY18, the company reported $1billion in annual gross merchandise value and 40 percent growth in its revenue.

Zomato also reported that it achieved 21 million monthly delivery orders and 2.4 million users last year. The company had also targeted expansion of its operations to 100 cities across India.

As said, the battle to become the leading food-tech firm in the Indian market is quite intense, and both — Zomato and Swiggy claims to be the leading player. However, that is coming at a cost. According to the industry sources, both companies are losing around $30-40 million each on monthly basis. Most of the money is spent on offering discounts to customers and incentives to delivery personnel.

Further, apart from each other, both the companies are also facing tough competition from the likes of Ola and Uber, which are also pushing for a market share in the food delivery market in India.

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