Zomato raises $20 million

Food technology company Zomato has raised a fresh round of funding of $20 million from existing investors Sequoia Capital, Vy Capital, Info Edge, along with two new investors, including WhatsApp’s Neeraj Arora.

The firm in a fresh filing with the Registrar of Companies, which was assessed by BusinessLine, on business research platform Tofler, said it has issued two different classes of preference shares as bonus shares to existing investors. The company has increased its authorised capital from ₹25 lakh to ₹131 crore, as per the documents.

Competition is also set to hot up, with taxi-hailing app Uber launching its food-delivery service UberEATS in India next week.

The online restaurant-discovery and ordering platform had last raised $60 million in September 2015 from Temasek and Vy Capital, at about $1-billion valuation. Its overall funding stands at $223.8 million since its inception in 2008, according to Crunchbase data.

However, in May last year, HSBC Securities and Capital Markets slashed the firm’s valuation citing poor performance, high cash burn and mounting losses. Soon after, equity research firm Jefferies also marked down Zomato’s valuation.

Meanwhile, Zomato’s fresh funding comes as the company successfully managed to bring down its cash burn to $12 million this year from $64 million a year ago.

The firm mentioned about its cash burn in a blog earlier this month.

The company also said its revenue increased about 80 per cent in 2016-17 to $49 million (₹294 crore) from a year ago. The company had posted a revenue of ₹154 crore in FY16 and ₹95 crore in FY15. The losses in FY16 were pegged at ₹266 crore compared with ₹72 crore in the year-ago period.

In a recent blog, Zomato Chief Operating Officer Surobhi Das mentioned that FY16 was not an ideal period for the company despite having achieved 2x growth in revenue over the previous year, as the cash burn (cash used in marketing activities and to acquire customers) was very high.

She said the company also consolidated its international operations last year. It launched a premium and subscription-based services called Zomato Gold in the UAE last year, and plans to launch it in India by June.

The company is also scaling up its food-ordering business, which was launched in 2015, and is getting into new business models such as cloud kitchen. Christened Zomato Infrastructure Services, it is a kitchen infrastructure service where the company will work with current restaurant business owners to expand their business to more locations without incurring any fixed cost.