Online food ordering firm Zomato is in an advanced level of discussions with Ant Financial — an affiliate company of China's Alibaba — to raise funds.
If the deal fructifies, Zomato will raise up to $200 million from the online payment service provider.
The deal is yet to be finalised and may put the value of the company at about $900 million. The value may also exceed $1 billion, according to the sources of Mint.
Zomato received another round of funding from Info Edge, Vy Capital, Sequoia Capital and a Singapore government-owned investment company in 2015.
The company is growing fast and has expanded its operations worldwide within a short span of time. Its revenue has doubled in the past one year, and its revenue from advertising is growing at 11 percent.
Zomato's performance so far
Zomato started its delivery business in 2015, which incurred losses. The 2016 financial year was a tough time for the company. Investors like HSBC Securities and Capital Markets (India) Pvt Ltd also slashed its valuation by about half to $500 million.
"We make Rs 20 profit on every delivery fulfilled by restaurants, while losing Rs 2 on every delivery we undertake," said Zomato's Chief Executive Officer and co-founder Deepinder Goyal.
The company had also withdrawn its operations from nine countries last year out of the 23 where it was present in order to maintain its cash burn rate.
Besides scaling back its operations and facing valuation markdown last year, the company had also trimmed its workforce.
However, the food-ordering platform now seems to be on the path of recovery as its March 2017 revenues alone have touched the $5-million mark. The company crossed 2 million orders in March 2017 – a move that gave it a 23 percent month-on-month growth.
At present, besides being on talks with Ant Financial, Zomato is also planning to bank on the more high-margin advertising business this year along with its food-ordering business.
Over and above, the company is still fighting for a leadership in the food delivery space that is right now dominated by startup competitor Swiggy in India.
