Online food delivery major Zomato is in discussion to fetch nearly $400 million through fresh funding round, according to people familiar with the matter. The development comes barely hours after Zomato’s main rival Swiggy raised $210 Mn from DST Global & other investors, propelling the latter to the coveted unicorn club.
Zomato is likely to raise these funds from existing investors Ant Financial and Temasek at eye popping valuation of $2 billion, sources claim. Sources also add that the Gurgaon based startup is also in talks with other investors to raise funds.
Zomato has so far declined to comment on the news report.
The recent fundraising competition between India’s two largest online food delivery companies is in stark contrast to last year’s scenario, when the entire industry was severely hit by funding drought. The drastic change in scenario is result of Zomato and Swiggy’s relentless efforts in cutting down its operational costs and improving earning margins.
Uber and Ola’s entry in online food delivery market
The intense fundraising events witnessed recently in online food delivery market may have been partly driven by Uber and Ola’s entry. The entry of cab-hailing majors may further intensify the competition, bringing pressure on incumbent market leaders Zomato and Swiggy.
Uber and Ola’s deep cash reserves and their ability to raise huge funds is also source of great worry for the incumbent market leaders. Both cab hailing majors entered India’s online food delivery last year, after Uber launched Uber Eats in selected cities and Ola made foray by acquiring FoodPanda.
However, industry experts claim that Swiggy and Zomato may not face any major threat from cab hailing companies if they manage to keep their customers happy and also keep their balance sheet in check. Experts also argue that Ola and Uber have entered the online food delivery market a little too late to create any major problems for existing market leaders.