Zomato, seems to be getting back in shape with new products and business models. The company is now planning for investment in food delivery and other new businesses. After rolling back from 9 countries, the company has significantly reduced its cash burn. Now the company has stabilized and is looking to raise a new round of funding. It has hired the services Morgan Stanley to look for prospective investors.
Founder and CEO of Zomato, Deepinder Goyal has confirmed this development. He also added that the company still has USD 30 million war-chest and said:
“We are raising this round to accelerate growth, we won’t die if we don’t raise capital. 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.”
Initially, Tte company secured USD 60 million at a billion dollar valuation from Singapore government’s sovereign wealth fund Temasek and investment firm Vy Capital. Later it faced a valuation markdown by HSBC, who slashed the same to half to USD500 Million.
The company plans to use half of the proceeds raised in the upcoming funding round towards the expansion of its delivery business but the remaining amount is will be used for towards its existing table reservation business and setting up of other opportunities. Zomato is planning to introduce the concept of cloud kitchens(or infrastructure services) where the company will invite restaurants to lease empty spaces and set up a kitchen for food delivery purposes in high demand areas. Goyal added in his statement.
“These will be delivery only food courts in areas where demand is very high but restaurants are not present,”
The company’s ordering business has gained momentum and accounts for over 20 percent of the total revenue share. The company has recently also acquired a logistics-tech startup called Sparse Labs to introduce real-time tracking for both users and restaurants. Its table reservation business, has also started catching pace. Thus, the company looks more interested in scaling up these offerings rather than building up another food-tech focused product.
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