Zomato to raise $1 billion ahead of rival Swiggy India IPO
Zomato on Tuesday said that its board has approved a plan to raise $1 billion via a share sale to institutional investors.
Zomato on Tuesday said its board has approved a plan to raise $1 billion via a sale of shares to institutional investors, as competition in India’s quick-commerce sector heats up.
The timing of the share sale, the company’s first major fundraise since its 2021 IPO, is notable, because it comes just weeks before its rival Swiggy’s public debut. Bengaluru-based Swiggy, backed by Prosus Ventures, SoftBank, and Accel, aims to raise about $1.4 billion in its IPO next month.
The move by Zomato, which one investor characterized as “sucking the air out of the room” for competitors, has caught market observers off-guard. Jefferies analysts called the capital raise “unexpected,” given Zomato’s existing $1.2 billion cash reserves. They suggest the strategy may be aimed at reducing foreign institutional investor ownership in Zomato below 50%, effectively transforming it into a “domestic” company.
The shift to majority domestic ownership could enable Blinkit, Zomato’s quick-commerce subsidiary, to adopt an inventory-based model in India. Current regulations restrict foreign-owned companies to conducting only marketplace operations, and prohibit them from owning inventory sold within the country.
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What is Zomato?
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Zomato, a pioneering online food delivery and restaurant discovery platform, was founded in 2008 by Deepinder Goyal and Pankaj Chaddah in New Delhi, India. The company's journey began with a humble start, driven by the founders' passion for food and technology.
Early days (2008-2010)
Deepinder Goyal, a computer science graduate from the Indian Institute of Technology (IIT) Delhi, and Pankaj Chaddah, an engineering graduate from IIT Kanpur, met while working at a software company. They shared a common interest in food and technology, which led them to start a food review website called Foodiebay.com.
The website allowed users to review and rate restaurants, providing a comprehensive directory of eateries in the city. Foodiebay.com quickly gained popularity, with users sharing their dining experiences and recommendations.
Rebranding and Expansion (2010-2012)
In 2010, the founders decided to rebrand Foodiebay.com as Zomato.com, a name inspired by the Italian word "zomato," meaning "to eat." This marked a significant milestone in the company's history, as it expanded its features to include restaurant listings, menus, and user reviews. Zomato also launched its first mobile app for Android and iOS devices, making it easier for users to access the platform on-the-go.
International Expansion (2012-2015)
Zomato's rapid growth and success led to its expansion into international markets. The company entered the Middle East, Southeast Asia, and Latin America, establishing a strong presence in these regions. This expansion not only increased Zomato's user base but also provided a platform for local restaurants to showcase their offerings to a global audience.
Series A and B Funding (2012-2015)
Zomato's growth and expansion required significant funding to support its operations and develop new features. In 2012, the company raised Series A funding of $1 million from InfoEdge, a leading Indian Internet company. This funding enabled Zomato to expand its team and develop its technology infrastructure. In 2013, Zomato raised Series B funding of $25 million from Sequoia capital and InfoEdge, which further accelerated its growth and expansion plans.
Series C and D Funding (2015-2017)
Zomato's success in international markets and its growing user base led to further funding rounds. In 2015, the company raised Series C funding of $60 million from Sequoia Capital, InfoEdge, and other investors. This funding enabled Zomato to expand its food delivery service and enter new markets. In 2017, Zomato raised Series D funding of $200 million from Ant Financial, a Chinese e-commerce giant, which further solidified its position in the market.
IPO and Expansion (2018-Present)
Zomato's growth and success culminated in its initial public offering (IPO) in July 2021, raising $1.1 billion. The company used this funding to expand its operations, develop new features, and enter new markets. Today, Zomato is one of the largest food delivery and restaurant discovery platforms in India, with operations in over 10,000 cities across 24 countries.
Key Milestones
Throughout its journey, Zomato has demonstrated its ability to innovate, expand, and adapt to changing market conditions. Today, the company is a leading player in the Indian food delivery and restaurant discovery space, with a strong presence in international markets.