Online food delivery unicorn Zomato has reportedly raised $150 Mn At $3 Bn valuations from existing investor Ant Financial, which is an affiliate of Chinese ecommerce business Alibaba. Zomato refused to comment on where the funds will be used, and what will be the ascribed valuation of the company, after the close of its $500 million fund raise.
The current round of funding is a part of Zomato’s larger $500 million fund raise, which the startup is looking to close before the end of this quarter. Earlier it was reported that the total round was due to close this month.
In 2018, Ant Financial invested $210 Mn in Zomato for 14.7% stake and became the online food delivery company’s largest investor. Then in November 2018, Ant Financials also raised his stake to 23%. The latest round is said to value Zomato at $3 Bn.
As per the agreement signed back in 2018, Ant Financial reportedly also got to have a greater say in Zomato’s operations as compared to other stakeholders. The agreement was reportedly valid for at least three years and gave the right to Ant Financial’s parent Alibaba to subscribe to the acquired shares in Zomato.
Zomato in a statement, said, “We confirm that we have raised $150 million from Ant Financial as a part of a larger round. Ant Financial has been a steadfast partner in our journey towards achieving market leadership in on-demand food delivery in India and dining out globally.”
“In a year’s time, we should be a profitable company. We have been able to reduce our cash burn by around 70 percent from what it was seven months ago,” Zomato Founder and CEO Deepinder Goyal had told PTI in December.
According to the foodtech major, the startup’s current cash burn is $15 million per month. However, in FY19 the Gurugram-based food delivery company’s losses widened from Rs 106 crore in FY18 to Rs 1,001 crore in FY19, marking a 9.4X rise. Along with this, in FY19, Zomato’s revenue soared to Rs 1,397 crore, marking a 188-percent jump from the revenue of Rs 485 crore it reported for the previous financial year. In July of 2019, Zomato completed 11 years. Over the years, the foodtech platform diversified itself from just being a restaurant search company to a food delivery company.
The investment comes at a time when Ant Financial is also looking to raise $1 Bn to invest in Southeast Asian payments and online finance startups. The funds will also include high valuation startups from India among other countries to gain a stronghold on the emerging digital economies. Moreover, Ant Financial has also applied for a digital banking license in Singapore.
The Zomato CEO also said that while the majority of the customers its customers come from India. Out of the 48 Mn customers, 23 Mn comes from India alone, the rest 25 Mn hail from other countries. The company has also been looking towards profitability by next year. Goyal, in an interview, highlighted that the company has managed to reduce its cash burn by 70% in the past seven months, limiting it to $15 Mn per month.
Last month, it was also reported by several other media that Zomato is close to acquiring Uber’s food delivery operations, UberEats. This is on the condition that the ride-hailing giant will put additional funding into the joint entity. According to media reports, if the deal comes through the combined entity will become the largest foodtech player in India, outpacing arch-rival Swiggy.
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