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Zomato in talks with Alibaba to raise funding of around $200 million

The deal could help the Chinese ecommerce giant expand its presence in the Middle East and Southeast Asia.

According to reports, Zomato, India’s premier food search, discovery, and delivery aggregator, is attempting to raise a fresh capital of around $200 million from Ant Financial, the finance arm of Chinese ecommerce behemoth Alibaba, giving the Indian company a valuation of almost $1.1 billion. If it goes through, Alibaba would become the owner of a significant stake in the company, which had its previous fundraising back in 2015. Back then, it had raised a sum of $60 million from Singapore’s national wealth fund Temasek, which had valued it at $960 million.

In the current financial year, Zomato has massively reduced its losses, by more than three-fourths, while increasing its revenue earning by 80 percent, and as such, Alibaba’s investment, if it goes through, couldn’t happen at a more opportune time. Zomato is currently operational in as many as 24 countries, with a major presence in the Middle East and Southeast Asia, both of which constitute markets that Alibaba is expanding its presence in. However, until now, no official statement from either company has been released, and the deal is seemingly yet to be finalised.

Towards the beginning of the year, Zomato had launched its subscription-based product — Zomato Treats, for its Indian users, based on the Zomato Gold model available to its UAE based and Portuguese users. The subscription gives you a free dessert with every meal you order from Zomato’s partner-restaurants, present in 16 Indian cities. According to the company’s statement last month, it had managed to sell 21,500 subscriptions within just four months, serving as many as 1 lakh treats to customers, to boot. It had contributed greatly towards increasing repeat usage, along with inducing a 25 percent increase in order frequency for subscribers, something that will continue to be in effect for a long time, according to Zomato Co-founder Pankaj Chaddah.

While several global players like Google and Uber have recently entered the domestic food ordering market with products like Google Areo and UberEATS, Zomato’s biggest contender till date has been its Indian rival Swiggy, which raised a sum of $80 million from South Africa’s Naspers, towards the beginning of the year. In spite of the difficulties that the Food-Tech business has faced, with more than 20 startups closing shop within the last 2 years, the industry seems to have picked up speed again, since the last 5 months. With around $700 million of fresh capital having been poured into the sector recently, it is expected that by the year 2020, it will have become a billion-dollar industry with just a handful of key players, such as Swiggy, Zomato, and UberEATS competing for the lead. 

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