From a small food delivery app to a $6 billion IPO: Story of Zomato is nothing short of amazing

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Zomato has been one of the most used apps and have been the world's largest growing Food-Tech Company. Here is the story of a giant food-tech app's journey.

Zomato: From a private company to a Public Limited Company

Zomato growth story: Zomato has been our saviour and one of the most downloaded applications on our mobile phones.

The advancement of technology has paved the way for a slew of new ideas, one of which is food delivery app growth.

Zomato recently changed to a public limited company from a private company ahead of its planned initial public offering (IPO) later this year.

On April 5, 2021, the famous food tech company passed a special resolution reorganising itself as Zomato Limited, starting April 9, 2021.

In April, Zomato intends to file a draft red herring prospectus (DRHP) also with the Securities and Exchange Board of India (SEBI) and related stock exchanges for its initial public offering. The problem, which has been there for quite some time, could help the Indian food distribution platform raise $650 million.

Small food delivery app to a $6 billion IPO

Upon transfer of compulsorily convertible preference shares (CCPS) owned by them, the firm has also allocated 4,430 Cr equity interest to all of its preferential shareholders — investors, sponsors, ESOP holders, and others. Another special resolution was passed to issue 247.6 crore share capital as incentive shares to existing shareholders in a 6699:1 ratio.

Zomato has capitalised INR 235.4 Cr from its protection premium account. Fidelity Group, ESOP Trust, Temasek, InfoEdge, and Zomato cofounders Deepinder Goyal and Pankaj Chaddah are among the 17 shareholders who have received shares.

Zomato has been raising money from both new and current investors as part of the IPO process to create a war chest of $1 billion. It raised $250 million (over INR 1,800 crore) in the first quarter of 2021 from Tiger Global, Kora, and others, bringing its value to $5.4 billion. With the proposed IPO, it plans to boost its value to about $8 billion.

Zomato Growth Story

 

Founders of Zomato
Image: Open Magazine

Zomato growth story: Deepinder Goyal and Pankaj Chaddah were IIT Delhi graduates who worked for Bain & Company in New Delhi. The duo witnessed that people were lingering for a long time in the office to just look into the menu card. This is when they germinated ideas to find a better way to save time and make it easy for people to access. This is how ‘Foodiebay’ was established in 2008. 

The menu was easily accessible on the internet which is when the whole office team began to use this app. The main aim was to save time which us when it soon increased the users. After which they decided to open the website for the general public.

Foodiebay is now known as ‘Zomato,’ a global food-tech firm. The app allows users to browse restaurant menus, read restaurant reviews, and order food from partner restaurants in selected cities. The service is now active in 24 countries and over 10,000 cities as of 2019.

Foodiebay to Zomato

Zomato growth stFoodiebay began in Delhi, and its operations were later expanded to Mumbai and Kolkata. Every year the number of app users has increased steadily. Foodiebay has grown in popularity as a result of its exclusive offerings to consumers. 

The increase in the number of users led the duo to extend it internationally and the result of this ‘ Foodiebay’ was renamed as ‘Zomato’ on 18 January 2010 as Zomato Media Pvt. Ltd. to make it more enticing, easy to remember and also to avoid confusion with ‘eBay’ app. 

Zomato was one of India’s first food tech brand, and it has continued to introduce new features.

Funds & Investment 

Zomato growth story: The founders of Zomato wanted to make it easier for people to use the service. Then, to serve the people and make access simple for consumers, a smartphone app was developed. However, creativity necessitated more resources. Zomato captivated Sanjeev Bikhchandani, the founder of  Naukri’s interest and he began to invest in this company.

He spent up to $1 million via Info Edge in 2010. (India). The same donors presented them with a massive fund of US$ 3.5 million the next year. And the following year a massive sum of US$10 million poured in from Info Edge. 

The ads platform that Zomato promises to view is now the portal’s primary source of revenue. The majority of its income comes from this, commissions fees charged to restaurants. It operates based on a commission-based business model.

Zomato’s Journey 

Zomato like any other start-ups had ups and downs in their company. 

Zomato’s fast growth can also be traced to the company’s rapid expansion outside of India. After achieving success in Delhi-NCR, the business expanded to cities such as Pune, Ahmedabad, Bengaluru, Chennai, and Hyderabad. 

Zomato began spreading internationally in 2012, with facilities in Sri Lanka, the United Arab Emirates, Qatar, South Africa, the United Kingdom, and the Philippines. New Zealand, Turkey, and Brazil were added to the list in 2013. 

 Zomato continued to improve its tech infrastructure to keep up with the growing smartphone trend and released its app. 

Also Read: Viral Twitter post on Mumbai’s struggling litti seller draws Zomato’s attention

Ups & Downs of Zomato 

Zomato bought Gastronauci, a restaurant discovery platform in Poland, and Cibando, an Italian restaurant finder, in 2014. The next year, Zomato rendered its most significant purchase, NexTable, a US-based online table reservation site. 

Zomato, which was struggling with declining sales at the time, had laid off a large number of people in 2015. However, the company managed to save the year by purchasing MapleOS, which will enable it to extend its registry, website, and operations, as well as add online reservations and mobile money transfers to its business model.

Following a sluggish 2016, in which Zomato saw yet another drop in sales, the firm agreed to halt operations in nine of the countries where it had spread, managing them remotely to avoid losing market share.

The most difficult challenge they faced was figuring out how to cover all of the locations of all of the key cities so that those who rely on them don’t miss out on the best restaurants. 

The founders were not particularly concerned with making profits, and as the website received widespread acclaim, they saw the opportunities it presented. Zomato has a customer base of 62.5 million users. As a result of these advantages, many restaurants have put ads in which they can earn a lot of money. 

By introducing a cashless exchange, Zomato has made it easier for their customers to pay their bills online.

Zomato’s Growth after 2019 

As a part Zomato growth story the sales increased by 225 per cent in the first half of FY2020. As per the company’s biannual survey, sales was $205 million in the first half of this year, up from $63 million the previous year. 

According to the survey, Zomato’s EBITDA loss decreased by 40% from March to September 2019. The organisation has stated that its monthly production rate, which calculates how quickly a company loses revenue, has decreased by 60%.

Zomato claimed to have registered an increase of 177% of restaurant partners after getting an additional 73K restaurants on board. In the H1FY20, the food aggregator and delivery startup have around 119K restaurants, compared to 43K last year.

Zomato raised about $500 million from established investors, Ant Group, and Sunlight Fund on January 22, 2021.

Zomato has been raising money from both new and current investors as part of the IPO process to create a slush fund of $1 billion. It raised $250 million (over INR 1,800 crore) in the first quarter of 2021 from Tiger Global, Kora, and others, bringing its value to $5.4 billion. With the proposed IPO, it hopes to boost its value to about $8 billion. 

To date, Zomato has earned over $2.1 billion. Tiger Global, Kora Capital, Luxor, Fidelity (FMR), D1 Capital, Baillie Gifford, Mirae, and Steadview were among the ten investors that joined the company’s cap table in December 2020.

Zomato’s Hyperpure

Image: HyperPure

Zomato’s initiative to include fresh, hygienic, and high-quality products and services. Zomato’s Hyperpure is revolutionising the restaurant industry.

It is B2B food technology distribution. Restaurants can order everything from vegetables, fruits, meat, groceries, products online from Hyperpure. 

It aims to source these ingredients directly from growers, factories, manufacturers, and traders, guaranteeing quality and accuracy.

Zomaland by Zomato  

Image: Zomato/Zomaland

Zomaland is India’s largest food and entertainment festival, bringing in some of the country’s best restaurants, bands and carnival games all together. It’s like an offline equivalent of Zomato Lists, where it collates and puts together the city’s best restaurants.

Despite its dominance in the market, Zomato is up against a lot of direct and indirect competition.

Zomato holding a tagline as “Never have a bad meal” is been constantly working towards the satisfaction of their customers despite ups and downs. 

Zomato’s growth story is a real-life spectacular example of how a simple concept will lead to the creation of a famous firm. The key thing to remember here is that having a big idea isn’t enough; it’s how you execute and enforce it that makes a big difference. The thriving entrepreneurship community is still in need of some new innovations and fresh starts. It’s the perfect moment for business start-ups to try something different.

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