Amid rising India-China tensions and India’s restrictions on foreign investment from China, Zomato is reportedly cut off from the money that it had raised previously in January. According to an FT report, the amount locked up amounts to nearly $100Mn, from the $150M that the food delivery company raised in total in the last round.
Back in January, Zomato had received a $150M cheque from existing investor Ant financial, the recently IPOed financial arm of Alibaba Group. The round however was still left open, as the food delivery upstart was expected to raise about $500 million in this funding round. But with COVID-19 coming in, the fundraising exercise was brought to a halt.
And while COVID-19 continues to reel in economic impact, a new rise in tension between India and China, largely instigated from the Chinese side, has further dented Zomato’s, and India’s startup ecosystem’s fundraising efforts. India recently rolled out an update to country’s FDI policy, blocking any direct investments from countries sharing land borders with it. And while it mentioned all countries, it was directed towards China, considering it is the only country to have the economic capacity to invest in Indian companies.
Ever since then, India’s startups, a lot of whom count Chinese investors as their biggest backers, have found it difficult to raise any further capital. Among India’s largest startups to have significant Chinese stakes are Swiggy, Paytm, Ola among others.
In response to the FT report, Zomato said that it is expecting the money to come through, and that it has enough cash to function without interruption. “The shortfall has not changed the company’s overall business plan, including a planned initial public offering in 2021,” a person at Zomato told the publication.