Zomato eyeing fresh funding; aggressive investment in traditional and new businesses

Zomato was one of the early unicorns in the Indian startup industry. The online restaurant discovery and food ordering player grew rapidly in the past, and was operating in numerous countries. However, by the end of 2015, the firm had to curtail its ambitious expansion plans as it was burning unprecedented amount of cash, and the investors were starting to feel jittery. Thus, over the last 12 months, the firm focused solely on increasing its revenues and cutting costs. The company was once valued at more than $1 billion, however, since then its high valuation has been questioned by a number of investment banks, with HSBC pegging it at $500 million. Although Zomato has disagreed with the reduced numbers time and again.

Now, Zomato is again eyeing to raise fresh capital and aggressive investment in its food delivery and other new avenues. The company has also roped in global investment bank Morgan Stanley for the new financing round, although the size of the funding or valuation is not yet fixed. Deepinder Goyal, CEO, gave following statement “We are raising this round to accelerate growth. Investor interest in the last 2-3 months has been very high. We were planning to start fundraising in March-April next year, but given the inbound interest, it made sense to start now.”

Zomato plans to use 50% of the expected funding for its bread and butter delivery business, while the rest will be used to expand new segments table reservations, cloud kitchens or infrastructure services where it will lease space and invite restaurants to set up a kitchen without fixed costs.