Zomato buys minority stake in AdOnMo and UrbanPiper, sets up an NBFC

Food delivery unicorn Zomato has agreed to acquire minority stakes in two companies — adtech firm Adonmo and business-to-business (B2B) software platform UrbanPiper.

Separately, the startup has announced setting up a Non-Banking Finance Company(NBFC) as its subsidiary. The proposed NBFC, whose name is yet to be finalised, will require RBI's (Reserve Bank of India) approval to carry out operations, the company said. 

As for its latest investments, Zomato will buy a 19.48 percent stake in AdOnMo for $15 million in cash. AdOnMo, which claims to offer digital advertising beyond personal devices to outdoor digital screens, is expected to help Zomato "leverage new digital avenues for customer acquisition," the company said in a statement. Founded in 2016, AdOnMo saw a turnover of Rs 3.27 crore in the financial year 2021. 

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The foodtech startup will pay another $5 million in cash to UrbanPiper for a 5 percent stake in the company, as a part of a larger $24 million investment round. UrbanPiper, founded in 2016, allows restaurants to integrate with multiple food-ordering and delivery players through a single interface, acting as a “middle layer” between them. It has a turnover of Rs 6.34 crore in the last financial year. 

“Both UrbanPiper and AdOnMo investments are synergistic to our core business and will help accelerate growth of these companies which will help in filling important gaps in the food ordering and delivery ecosystem in India,” the company said in an exchange filing. 

The latest deals are in line with Zomato's plan to invest in core food businesses and the surrounding ecosystem. It had committed to deploying $1 billion in the startup ecosystem over the next 1-2 years. 

“We believe that the food delivery market in India is still nascent, and there is an opportunity to grow the market at least 10x over the next few years,” Zomato had said earlier in November, during its second quarter earnings. 

“In order to make this happen, we are going to continue investing heavily in market creation, in addition to investing in ecosystem companies around our food delivery business so that the cost of running a better food delivery business goes down with time.”

The company has already invested  $275 million across four companies in six months before November 2021.  This involves its $100 million investment in hyperlocal grocery delivery service Blinkit (formerly Grofers), $75 million in logistics technology player Shiprocket’s owner Bigfoot Retail Solutions, $50 million in fitness technology company Curefit and $50 million in Samast Technologies Pvt. Ltd, which runs hyperlocal discovery platform Magicpin.