Zomato has raised $660 million in a financing round that it kicked off last year as the Indian food delivery startup prepares to go public next year.
The Indian startup said Tiger Global, Kora, Luxor, Fidelity (FMR), D1 Capital, Baillie Gifford, Mirae and Steadview participated in the round -- a Series J -- which gives Zomato a post-money valuation of $3.9 billion. 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.
The startup originally anticipated to close a round of about $600 million by January this year, but several obstacles, including the current pandemic, delayed the fundraise effort. Additionally, Ant Financial, which had originally committed to invest $150 million in this round, only delivered a third of it, Zomato's investor Info Edge disclosed earlier this year.
The Gurgaon-headquartered startup, 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 currently offers its food delivery service in only parts of Bangalore.
At stake is India's food delivery market, which analysts at Bernstein expect to balloon to be worth $12 billion by 2022, they wrote in a report to clients -- accessed by TechCrunch. With about 50% of the market share, Zomato is the current leader among the three, Bernstein analysts wrote.
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. Goyal said the food delivery market is "rapidly coming out of COVID-19 shadows. December 2020 is expected to be the highest ever GMV month in our history. We are now clocking ~25% 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."
In September, Goyal told employees that Zomato was working for its IPO for “sometime in the first half of next year” and was raising money to build a war-chest for "future M&A, and fighting off any mischief or price wars from our competition in various areas of our business.”
Making money with food delivery has been especially challenging in India. Unlike Western markets such as the U.S., where the value of each delivery item is about $33, in India, a similar item carries the price tag of $4, according to estimates by Bangalore-based research firm RedSeer.
“The problem is that there are very few people in India who can afford to place an order from a food delivery firm each day,” said Anand Lunia, a venture capitalist at India Quotient, in an interview with TechCrunch earlier this year.