India’s Zomato raises $100M from Tiger Global, says it is planning to file for IPO next year
Indian food delivery startup Zomato has raised $100 million from Tiger Global and is preparing for the next phase of its journey: An IPO.
Tiger Global financed the capital through its investment vehicle Internet Fund VI, according to a regulatory filing. Info Edge, a major investor in Zomato, confirmed the development Thursday evening, adding that the new round valued Zomato at $3.3 billion post-money.
In an email to employees earlier today, Zomato co-founder and chief executive Deepinder Goyal said the startup had about $250 million cash in the bank and several more “big names” investors would be joining the current round to increase its cash reserve to about $600 million “very soon.”
“Important note — we have no immediate plans on how to spend this money. We are treating this cash as a ‘war-chest’ for future M&A, and fighting off any mischief or price wars from our competition in various areas of our business,” he added in the letter, reviewed by TechCrunch.
Zomato, which acquired the Indian food delivery business of Uber early this year, competes with Prosus Ventures-backed Swiggy in India. A third player, Amazon, has also emerged in the market, though it is currently servicing food delivery in only select suburbs of Bangalore.
Goyal told employees that the 12-year-old startup is also working for its IPO for “sometime in the first half of next year.” (It’s unclear how Zomato plans to achieve this target, but it is likely looking at listing in the U.S. or some other market. Current Indian law requires a startup to be profitable for at least three years before they could publicly list in India — though there has been some proposal to relax this requirement.)
The new pledge from Zomato is the result of a major economic improvement in its business in recent quarters. Until mid-last year, Zomato was losing more than $50 million a month to win and sustain customers by offering heavy discounts.
The Gurgaon-headquartered firm, which like Swiggy eliminated hundreds of jobs in recent months as coronavirus ruined the appetite of Indians ordering food online, said in July that its losses for the month would be less than $1 million.
The startup also faced obstacles in raising new capital. It kickstarted its financing round a year ago, but had secured only $50 million as of a month ago. The startup had originally anticipated closing this round, at about $600 million, in January this year.
In an emailed response to TechCrunch queries in April, Goyal had attributed the delays to the spread of coronavirus and said he expected to close the round by mid-May. He wrote to employees today that Tiger Global, Temasek, Baillie Gifford, and Ant Financial had already participated in the current round.