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Since last 3-4 months soon after Zomato declared that its profits have dipped by more than 30%, it has left no stone unturned to bring in more revenues and run its operations at its full potential, leading to 3 million orders a month.
Right after its official announcement of completing 3 Million orders a month, speculations around Alibaba to invest in Zomato surfaced which was a clear outcome of Zomato’s aspirations of turning into India’s first FoodTech Unicorn. The company has been awarded the unicorn title twice, once in the year 2015 and now after its recent valuation by Nomura.
One of the Japan based holding company Nomura has valued the company to be $1.4 Billion by Mar, 2019. Speaking on the development Ashwin Mehta, Nomura India Executive Director, stated, “The Street has valued Zomato at a discount to its last fund-raise valuation of $1 Bn in September 2015. We conclude that the market’s valuation is too low. We raise our Zomato valuation to $1.4 Bn (vs $1 Bn earlier), valuing its advertising and food ordering businesses at 5.5 times and 6 times (over the next 5 years).”
FoodTech wants to scale but don’t have funds…
The FoodTech fervour seems to be moving towards consolidation and founders are finding to difficult to sustain with the existing revenue channels as 2017 is more of rationalisation and less of pumped up valuation for investors community. Also, the recent shutdown of some of the biggest food delivery startups reveals that the space is highly competitive and users are driven through discounts in maximum times and quantity, leading to skimmed margins and huge dependability on the investors money to run the show. Some of the leading Startups which have been shut down are TinyOwl, Dazo, Zupermeal, Zeppery, BiteClub, and Eatonomist.
However some of the Startups are leading the way and are able to get their ground but still finding it difficult to scale, as it involves huge investments and they couldn’t execute to scale without massive cash piles, which are eventually going to come with investments. This chicken and egg problem of funds to scale emanates from the very reason to become a market leader in less time.