Zomato, a restaurant discovery and food delivery app, is reportedly in final negotiations to raise an additional $400 million from its investors Ant Financial, which is owned by Alibaba, and Singapore’s Temasek Holdings. The potential investment, which was reported by Livemint, could value the company at as much as $2 billion. Talks have reportedly been going on since early April.
A threat from a rival unicorn
The report come swiftly after rival food delivery service Swiggy closed a $210 million infusion in a funding round which was led by Naspers, a South African media conglomerate, and DST Global, which is owned by Israeli-Russian billionaire Yuri Milner. The investment has catapulted Swiggy to the unicorn club by giving it a valuation of $1.3 billion.
This is a significant achievement for a company that is only four years old. It took Zomato more than twice the time to become a unicorn.
The investment puts Swiggy ahead of Zomato, in terms of valuation, until the latter’s funding round is completed. In February, Ant Financial ploughed $200 million into Zomato, valuing it at $1.1 billion in the process. Swiggy was valued at around $700 million around the same time.
As the companies take on each other in terms of valuations, they will also try to muscle each other out in a hotly-contested market. Swiggy currently leads Zomato in terms of orders, clocking in more than 10 million a month as compared to Zomato’s 7 million.
Alongside the e-commerce and ride-hailing sectors, the online food delivery space is another battleground for tech companies in India. A number of companies are competing in the space, including ride-hailing apps like Uber, which is ramping up its UberEats services, and Ola, which acquired Foodpanda late last year.
As they try and seize each other’s market share and make inroads into new cities, a lot of cash will be spent on supply chain expansion while handouts will be given to entice restaurants and customers to come aboard.