Zomato, on Thursday, confirmed it had raised $150 million from Ant Financial, Alibaba’s payment affiliate. As a part of the deal, Ant Financial will also buy shares worth $50 million from investor InfoEdge, taking the total investment up to $200 million. With this deal, Zomato’s valuation has been pegged at $1.1 billion.
According to a press statement by Zomato, the funds will be used to strengthen the team’s leadership position in its core markets by investing in product and technology. Zomato is also looking at offering more convenient payment options to users with Ant and it’s strategic mobile wallet payments.
Deepinder Goyal, Founder and CEO, Zomato, said the company's long-term vision is to deliver better food to more people. This partnership will help Zomato achieve that vision, he added. “We believe that Ant is the right strategic partner for our business at this stage, and we can gain tremendously by learning from and leveraging their global network, scale and technology,” says Deepinder.
According to Zomato, the platform is used by many to decide where to eat in over 10,000 cities across 24 countries. Douglas Feagin, President of Ant Financial International, in a press statement said:
“Ant Financial is pleased to be part of Zomato’s growth journey and hopes to contribute to its future development into a full-fledged food services platform. We plan to work closely with Zomato and share Ant’s business and technology knowhow in building lifestyle apps. Through our strategic mobile wallet partners in India and across Southeast Asia, we see immense opportunities to collaborate with Zomato to bring a much-improved user experience around dining, food ordering, and delivery.”
Foodtech startups were built on the foundation that roti, kapda aur makaan could never go out of demand, but over time, many of them faced an early death. By 2016, several food startups - TinyOwl, Dazo, Spoonjoy, Eatlo, and EatOnGo - were out of the fray; and this chill continued to the beginning of last year, with EatFresh and Yumist shutting shop. Only the big two – Swiggy and Zomato – have survived.
Sathish Meena, Senior Forecast Analyst, Forrester Research, says: “If you look at it even now, the game is of the big players. The funding is coming only for the big guys. There is a market for food delivery and foodtech, but now that the money is being pumped deeply into one segment.”
In two years since launching the meal delivery service, Zomato has 25,000 restaurants on its platform in India, including 7,500 that are exclusively available only on Zomato.
Last month, Swiggy also raised $100 million led by Meituan-Diaping and Naspers.
Apart from Swiggy and Zomato, there is also UberEats and Ola-backed Foodpanda in the foodtech space. Foodpanda was one of the casualties of the 2016 foodtech bloodbath that 'massacred' several food startups.
The foodtech run is sure going to be more interesting.