Following the news that Indian food delivery startup Zomato has raised US$250m in a fresh funding round. Aurojyoti Bose, Lead Analyst at GlobalData, a leading data and analytics company, offers his view.
“After the latest funding round, Zomato has emerged as the most-valued foodtech unicorn in India with a valuation of US$5.4bn. It testifies the confidence investors have in the company, which had a tough time during 2020 and had to lay off a sizeable number of workforce due to the COVID-19 pandemic. However, Zomato has started hiring again as businesses start returning to normalcy.
“Zomato is gearing up for IPO in 2021 and investors seem to be optimistic about the company’s stock prospects. The capital raising ahead of the proposed IPO is in line with Zomato’s strategy to improve its finances for pursuing M&A while also warding off competition and address challenges such as price war.
“India is the second fastest growing food delivery market in the world. GlobalData forecasts the market to grow at a compound annual growth rate of 12.4% during 2019-2023. Zomato is aggressively competing with Prosus-backed Swiggy to grab significant market share. In addition, Amazon’s foray into the Indian food delivery market makes it imperative for the likes of Zomato and Swiggy to strengthen their finances to be future ready for an environment where competition and price war continue to intensify. Furthermore, it becomes crucial for Zomato as it plans to go public in 2021.”