Online food delivery platform Zomato’s initial public offering (IPO) of Rs 9,375 crore has open on 14 July i.e. on Wednesday. It is believed that the company’s IPO will get a good response from global institutional investors. Zomato is the first company in India’s long list of unicorn startups to IPO.
The IPO has opened on 14 July and closes on July 16. Its price range has been fixed at Rs 72 to 76 per share. The company plans to raise Rs 9,375 crore from the IPO. Zomato is backed by Jack Ma’s Ant Group company.
It is noteworthy that Zomato is the first online food aggregator, which is going to launch an IPO. Based on its IPO, the valuation of Zomato comes to Rs 64,365 crore. After the opening of the popular IPO, some investors face server or network issues. This is because the demand is very high in a very short period of time.
Zomato is an Indian restaurant aggregator and food delivery start-up, founded in 2008 by Deepinder Goyal and Pankaj Chaddha. The company provides information, menus and user reviews of partner restaurants in selected cities, as well as meal delivery options. The company has also started grocery delivery amid the COVID-19 outbreak. As of 2019, Zomato has managed to spread its service to 24 countries and over 10,000 cities. After recently raising $660 million from existing investors, the company is valued at $3.9 billion. “Never have a bad meal” is the tagline of Zomato. Today we will try to know the inspiring story of Zomato founder Deepinder Goyal and Pankaj Chadha through this story.
Prior to the founding of Zomato, Deepinder Goyal and Pankaj Chaddah were both founders of Bain & Co. Worked in the office of New Delhi. Where Deepinder Goyal was serving as Senior Associate Advisor and Pankaj Chadha as Senior Analyst. Both are graduates from IIT Delhi.
Zomato was launched in 2008 by Bain & Co. from its New Delhi office. When Deepinder Goyal and Pankaj Chadha were sitting in the company’s food court for lunchtime, they noticed that many people were standing in long queues waiting for their turn to catch a glimpse of the menu card. He thought of finding a solution to this and the idea came to the public in the form of FoodieBay.
They scanned the copies of the menu cards and uploaded them on the company’s private network. Soon the employees started using this facility to save their time. Because of this, there was a jump in traffic on the website. Seeing this, the two founders made this Internet-based service public, and the menu was no longer confined to the cafeteria but spread far and wide.
The first professional restaurant menu that Deepinder and Pankaj uploaded on their site was Hauz Khas in Delhi. After Delhi, he started uploading restaurant menus on his website in other metropolitan cities of the country including Kolkata, Mumbai and Bangalore. Their services were used by thousands of users and since then the number has increased manifold.
FoodieBay was gaining recognition as it was the first startup to offer such services. Deepinder and Pankaj changed the name of Foodiebay to Zomato in November 2010 to make the name FoodieBay more appealing and to avoid any confusion with the popular website eBay. Which helps food lovers and hungry people to reach the food of their choice with the wide utility of the website through finding restaurants and menu cards.
Deepinder Goyal and Pankaj Chaddah thought of launching the ‘Zomato App’ to reach out to the people easily and started looking for investors to broaden their idea. But as they say, if you have a great founder along with a great idea, you will never feel short of funding. In 2010, Sanjeev Bhikchandani, the founder of naukri.com, through his company Info Edge, provided seed funding of $1 million to Zomato.
After this, Zomato never looked back in the mood, in the next round, they got a funding of $ 3.5 million. In 2013, Info Edge India bought over 50 percent stake in Zomato, investing $10 million. Apart from this, many investors like Sequoia Capital, Vy Capital and Temasek invested in this startup. In this way, Zomato has accumulated $ 300 million by the year 2018.
Rapid Expansion and Competitors
The company now started focusing on expansion plans, by year 2011 Zomato launched its services in the other three major cities of India Chennai, Hyderabad and Ahmedabad. Also, by starting its services in Dubai in September 2012, Zomato launched its services in India. Expanded beyond borders, they also began to expand into other countries such as Sri Lanka, the United Kingdom, the Philippines, South Africa, New Zealand and Turkey. With 90 million registered users, Zomato is a platform where anyone can get in touch with food items from across the globe. Despite this, Zomato is facing several direct and indirect competitors like DoorDash, Swiggy and UberEats.
Zomato’s Business Model
Big restaurants around the world place their advertisements on Zomato’s website to grow their business, as well as make money through a commission by delivering food items, selling tickets for food festivals. Through this journey of success was not an easy one for Zomato and Deepinder, the founders as well as other team members have put in their efforts to bring the company to this position today.
Recently when he launched his website in Dubai, co-founder Pankaj Chadha himself went out to get details of the restaurant in the scorching summer heat. Even today, the challenges faced by Zomato are no less, due to the expansion in the Indian market without analyzing the food market, the company had to shut down its services in Lucknow, Kochi, Indore and Coimbatore, however, within eight years the company. It has a presence in around 22 countries.
Growth of Zomato
Zomato has developed itself as India’s first Mobile App and today the startup is the only unicorn company to rule many major markets across the world. Now Zomato covers over 1 million restaurants and receives over 25,000 orders every day. Today Zomato is hoping to increase its growth rate to be at par with the global players present across the globe and for this both Deepinder Goyal and Pankaj Chadha have left no stone unturned.
What do Analysts say?
Analysts are confused about this. Many analysts are advising retail investors to stay away from loss-making issues, while others say that we have to do away with the old method of measuring value and look at market size and other factors. Without naming any company, G Chokkalingam, founder and MD, Economics Research & Advisory, said small investors should avoid IPOs of companies that are making losses. On the other hand, Hemang Jani of Motilal Oswal Financial Services said that in a bull market, people want to grab every good brand which has an exciting story behind it.
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