Zomato launches platform to connect investors with restaurants. Will it invest in these deals?
NSE and BSE listedhas launched Zomato Wings, a platform to connect investors with restaurants.
In a blog, Deepinder Goyal, Founder and CEO of Zomato, said that "Zomato grows when our Restaurant Partners grow".
Zomato's chief added that there are thousands of budding restaurants that may not have the expertise or the focus to fundraise at the right time from the right investors. "This is where we want to help," he said.
The blog post explained that just like how ambitious restaurant entrepreneurs look for investors, investors also hunt for brands and teams that have the potential to become the next big chain. With Zomato Wings, the foodtech major hopes to build the go-to platform for venture capital firms, angel investors, family offices, etc that are looking to make private investments in restaurants and cloud kitchens.
Zomato plans to connect at least 100 restaurant brands in the next three years.
"As we partner with more investors by connecting them with enterprising restaurants, more budding restaurants would use this platform for fundraising, and the platform’s flywheel would create a win-win for restaurants and investors, and by extension, for Zomato!," said Deepinder.
But will Zomato be investing in these deals? The clear answer seems no.
As Deepinder puts it, "We would have loved to! We have a strong conviction in the imminent success of so many of our restaurant partners, and nothing would give us more joy than becoming closer partners. However, we are mindful that by owning an equity stake in one brand, we may raise some concerns among other brands. Again, we do not want to compete with restaurants, and want to remain a fair and neutral platform for all restaurants."
He added that Zomato’s role would be limited to being a facilitator of fundraising for restaurants, and that it will help restaurants position their story and metrics in the right manner and connect them with the right investors.
He said that, ideally, capital should seamlessly follow any great restaurant, but in reality, it is not easy for restaurants in India to raise funding through growth-focused equity investors.
"So we constantly ask ourselves – what does it take for a great restaurant to grow further and faster? We believe it is a combination of great food, exceptional customer service, entrepreneurial team, loved brand, and easy access to capital," the blog read.
It added that while some large chains have attracted investors, "we have barely scratched the surface – in the last three years, only about 25 restaurants and cloud-kitchens saw Series A or larger equity funding rounds, as per Tracxn".
The restaurants that want to explore this opportunity can reach out to their account manager, and institutional investors can write to Zomato at firstname.lastname@example.org.