Indian food delivery firm Zomato secures $660mn in Series J funding

Zomato raised $660 million in a fundraising round that it launched last year, as the Indian food delivery company prepares to go public next year.

Tiger Global, Kora, Luxor, Fidelity (FMR), D1 Capital, Baillie Gifford, Mirae and Steadview have participated in the Series J round which gives Zomato a $3.9 billion post-money valuation. Zomato had previously disclosed a fundraise of about $212 million as part of a Series J round from Ant Financial, Tiger Global, Baillie Gifford and Temasek.

Deepinder Goyal, the co-founder and chief executive of Zomato, said the 12-year-old startup is also in the process of closing a $140 million secondary transaction. “As part of this transaction, we have already provided liquidity worth $30m to our ex-employees,” he tweeted.

Originally, the startup planned to close a round of around $600 million by January of this year but many hurdles, including the ongoing pandemic, delayed the fundraising effort. Furthermore, Zomato’s investor Info Edge revealed earlier this year that China’s Ant Financial, which had originally pledged to invest $150 million in this round, only delivered a third of it.

A booming market

The startup, which acquired US-based Uber’s Indian food delivery business earlier this year, competes in India with Swiggy, which is backed by Prosus Ventures. A third player, Amazon, has also emerged on the market, although its food delivery service is currently being provided only in parts of Bengaluru, a major city.

India’s food delivery market is at stake, which analysts expect to swell by 2022 to be worth $12 billion. Zomato is the current leader of the three, analysts said, with around 50 percent of the market share.

Zomato eliminated hundreds of jobs this year to improve its finances and navigate the coronavirus pandemic, which significantly hurt the food delivery business in India in the early months.

Mr. Goyal said the food delivery market is “rapidly coming out of COVID-19 shadows. December 2020 is expected to be the highest ever GMV (Gross Merchandise Value) month in our history. We are now clocking  approximately 25 percent higher GMV than our previous peaks in February 2020.” He added, “I am supremely excited about what lies ahead and the impact that we will create for our customers, delivery partners, and restaurant partners.”

Making money with food delivery has been especially challenging in India. Unlike Western markets such as the US, where the value of each delivery item is about $33, in India, a similar item carries the price tag of $4, according to estimates.