Zomato Beefs Up Valuation Prior To IPO In Its Latest Fundraising Round!

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Before heading to the stock market with an IPO, the homegrown food delivery startup Zomato beefs up its valuation by raising a whopping $250 million as an investment.

According to a regulatory filing by one of Zomato’s earliest investors Info Edge, the latest round of investment raised by the food-tech giant has been led by Tiger Global, Kora Management, Fidelity Management, Dragoneer Investment Group and Bow Wave Capital Management.

After the latest round, Zomato has so far raised a total of $21. billion in 20 rounds of investment.

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Post the recent and latest investment round, now Zomato’s valuation has soared all the way up to $5.4 billion from its previous figure of $3.6 billion. Note here that Zomato participated in three major fundraising events in 2020 as well – in what is pegged to be a pre-IPO round.

Source: BI

Post this latest round of Zomato, Info Edge’s stake has been diluted all the down to 18.4%. Founded in the year 2008, Zomato is on its way to becoming one of the first startups in India to head for an IPO.

According to a media report from last year, Co-founder and CEO of Zomato Deepinder Goyal, in an email to his employees, mentioned how the company is looking forward to getting listed publicly in H1 2021.

Currently, the food-tech startup, which acquired the food delivery business of Uber in India last year, competes with Bangalore based Swiggy which is valued at $3.6 billion.

In 2020, a third major player – Amazon has also made its entry in the food delivery space of India. But, as of now, their operations are limited to Bangalore only the ecom-giant’s food delivery arm testing the waters before expanding further.

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All the 3 major players are gunning to dominate the $12 billion Indian food delivery market, estimated by analysts at Bernstein. In a report to its clients, Bernstein analysts wrote how 50% of the market share currently belongs to the IPO-bound Zomato.

The food-tech industry in India is booming and very well positioned to sustain growth as unit economics keep improving. According to a recent report by analysts at Bank of America, take-rates at 20%-25% are one of the highest in the country and consumer traction is continually increasing as well.

Both Zomato and Swiggy have rapidly improved their finances in recent years – an incredible feat given the food delivery landscape, unlike Western markets where the value of each delivery item is about $33 or more, carries a tag of only $3-4.

India food-tech unicorn Zomato posted an impressive 84% increase in revenue to Rs 2,486 Cr in FY’20 ending March 2020. However, the losses also ballooned by 161% to Rs 2,451 Cr.

Depinnder Goyal, in an earlier blog, wrote how Zomato faced the test of times in the pandemic-ridden 2020 but it also brought the company closer to profitability. He mentioned how in terms of the business size, COVID-19 set Zomato back by a year or more but that is but a small blip when one is building a company for the next 100 years.

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