From overtaking arch-rival Swiggy in December last year, IPO-bound Zomato has now been able to further slingshot its valuation on the back of piling war chest as it strengthened its pole position in the online food delivery market as the most valued foodtech player. The company, which was post-money valued at $3.9 billion, following the closure of its massive $660 million fundraise in December, has now received another cheque. Zomato secured $250 million in its latest investment round at a post-money valuation of $5.4 billion, online classifieds company Info Edge said in an exchange filing. Info Edge is among the early backers of Zomato and had an 18.4 per cent stake in the company on a fully converted and diluted basis post this round.
The latest primary fundraise saw $115 million contributed by Kora Management followed by $55 million from Fidelity, $50 million from Tiger Global, $20 million from Bow Wave Capital and $10 million from Dragoneer. Earlier, Zomato was valued at $3.6 billion following $195 million funding in November. The latest fundraise has made Zomato $1.8 billion more valuable than Swiggy that was last valued at $3.65 billion following the $43 million additional funding it raised in April 2020 as part of its Series I round. The online food delivery market has a duopoly of Zomato and Swiggy capturing the majority share of the opportunity.
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According to Zomato Founder Deepinder Goyal, the company had provided liquidity worth $30 million to its ex-employees as part of the December round. The investments in both Swiggy and Zomato amid Covid stressed on the investors’ confidence in the sector that was impacted severely amid Covid with negligible orders and fewer operational restaurants before it bounced back strongly as more people switched to online ordering. Zomato had laid off nearly 600 employees – 13 per cent of its workforce due to Covid impact, according to an internal note by Goyal written to employees in May.
Even as Zomato is looking to list this year, it had reported a staggering 160.6 per cent jump in its FY20 losses to Rs 2,451 crore from Rs 940 crore in FY19 while revenues had increased from Rs 1,255 crore in FY19 to Rs 2,485 crore in FY20. For Swiggy, its losses FY20 stood at Rs 3,920.4 crore in comparison to Rs 2,363.6 crore for FY19 while revenues had jumped from Rs 1,297.3 crore in FY19 to Rs 2,955.6 crore in FY20. According to analysts in a recent report by Kotak Institutional Equities, online food delivery has around 15 million transacting users currently and is likely to increase to 80 million ahead, as reported by Financial Express. Moreover, the order frequency also may grow to up to nearly five times a month from about three to four times currently.