Online restaurant discovery and food delivery company Zomato has raised $200 million from Alibaba’s financial firm Ant Financial, according to Info Edge’s (Zomato’s largest investor) latest filing with the stock exchange. Interestingly, the timing of this investment has almost coincided with Alibaba’s fundraising round for online grocery Big Basket. Whether there is any possible connection between the two events can’t be really ascertained, but it certainly marks Chinese e-commerce giant’s growing interest in the Indian startup ecosystem.
Following Alibaba’s investment, Info Edge will divest 6.66% for $50 million in Zomato, bringing its stake from 45% to nearly 31%. Alibaba will reportedly end up holding almost 26% stake in the company. This fundraising round led by Alibaba has valued the Gurgaon based company around $760 million.
Zomato’s latest fundraising has come after a really long spell. Owing to wafer-thin margins, most big players in the online food delivery industry have struggled to increase their revenue. While Zomato and Swiggy managed to hold on during the tough times, Foodpanda could not. Foodpanda, which was once the darling of investors, sold its business to ride-hailing major Ola in December last year.
For Zomato, the impressive performance in 2016-17 proved critical to once again trigger the investor’s interest. The company posted a loss of 389 crore for the financial period 2016-17, down from Rs 590.1 crore recorded in the previous year. Its revenue, on other hand, increased 80.6% at Rs 332.3 crore, up from Rs 183.9 crore in the previous fiscal year.
The fresh funds will most certainly offer more firepower to Zomato as it tries to fend off competition from Swiggy, which itself is looking to raise more funds from investors. Swiggy had raised $80 million (Rs 517 crores approximately) from Nasper in May last year.