Zomato has cut losses; gears up for fight with rivals
Just around a year and half earlier, Zomato, the food ordering and restaurant discovery platform, was vulnerable. In the foodtech meltdown that saw at least two dozen companies being shut, the Gurugram-based entity faced its own challenges. The business was floundering, it got backlash from users for advertising on pornography sites and the losses were mounting.
It was timely advice and guidance from Sanjeev Bikhchandani, founder and executive vice-chairman of Info Edge, the main investor in Zomato, which helped in keeping the company afloat.
Amid the turmoil, Zomato founders Deepinder Goyal and Pankaj Chaddah reached for advice to Bikhchandani and Hitesh Oberoi, Info Edge’s managing director and chief executive, whose online portfolio includes Naukri.com and 99acres.
Oberoi says Bikhchandani and he have been only good sounding boards. “To be honest, we have little to do with the companies (we invest in). They have managed it quite well. During the bloodbath, we advised them to focus on customers, build intellectual property— our advice to all our companies. We are always available as a sounding board, I am sure they talk to Sanjeev but the founders are the ones who run the show,” says Oberoi.
The focus on business has helped Zomato, founded in 2008. It has been able to cut losses by 34 per cent, to ~389 crore in 2016-17 from ~590 crore the previous year, according to the annual report of its largest shareholder, Info Edge. Its revenue also saw a spike of 81 per cent to ~333 crore, from ~184 crore a year before, the company said.
It has to do more. While on track to a turnaround, Zomato has struggled to raise fresh funds, while rivals Swiggy and Foodpanda have been able to get multi-million dollar cheques from global investors. Sources in the company said valuation has been an issue. According to sources, the company is finding it hard to get a valuation of a billion dollars or more.
It has so far held talks with major investors such as Baidu, Tiger Global and now Alibaba’s fintech arm, Alipay. The company started talks with Baidu in January last year, in hopes of raising $200 million.