Food-tech unicorn Zomato is courting new investors in a bid to raise up to $1 billion in fresh funding even as Japanese investment giant SoftBank has cooled its interest and may opt to back rival Swiggy instead, multiple people familiar with the development told TechCircle.
“Zomato would be able to raise up to $1 billion and the valuation is likely to touch $3 billion post the funding round,” the person said on the condition of anonymity.
A second person said that SoftBank had also been in the fray to invest in Zomato but has since backed out after portfolio company Meituan-Dianping, a Chinese e-commerce platform, invested in Swiggy last year and then topped it up in a $1 billion round led by South African technology conglomerate Naspers last month.
“Zomato has been looking to raise capital in order to compete with Swiggy's growth,” the second person said.
Earlier in the day, The Economic Times had reported that Zomato was in talks with Chinese private equity major Primavera Capital and Ant Financial besides other investors for a fresh round of funding.
While Zomato may no longer be on SoftBank's radar, Swiggy is very much in its sights.
"The founders (of Swiggy) met with Son (SoftBank CEO Masayoshi Son) a couple of months ago," said an investor privy to the $1 billion round that Swiggy closed in December. “Since the last funding round had nearly closed, they decided not to participate at the time but have kept their options open on a new round in the near future.”
Email queries sent to Zomato and Ant Financial did not elicit a response till the time of publishing this report. SoftBank said it does not comment on speculation.
Zomato and Swiggy are in a tussle to boost their war chests as they battle to capture market share.
Swiggy raised three funding rounds in excess of $100 million in 2018 from the likes of Chinese technology conglomerate Tencent and Russian-Israeli billionaire Yuri Milner’s DST Global.
In comparison, after its latest fundraise, Swiggy’s valuation has skyrocketed to around $3.3 billion.
Swiggy also leads Zomato in terms of monthly order volumes, a person in the know told TechCircle.
The duo competes with the likes of FreshMenu, Uber Eats and Foodpanda India, which was acquired by homegrown cab-hailing major Ola in late-2017.
Both Swiggy and Zomato posted net sales in the region of Rs 450 crore in the financial year 2017-18. For Swiggy, this was more than triple the number compared to the previous fiscal as it caught up with Zomato.
Zomato’s operational revenue grew 40% to Rs 466.36 crore while net loss shrank to Rs 106.3 crore from Rs 390 crore in the year before that, according to the company’s filings with the Ministry of Corporate Affairs.
Both companies also made acquisitions in 2018 to aid their expansion.