Online food delivery platform Zomato on November 10 declared a $175 million investment over three homegrown startups — Shiprocket, Curefit and Magicpin — intending to broaden its bets following a blockbuster public listing. It further plans to dispose of another $1 billion over the next 1-2 years, with a significant focus on the immediate commerce space.
While the Shiprocket funding is part of a $185 million round that the company seeks to raise, Curefit and Magicpin’s are standalone equity rounds. Calling it a brutal prioritisation, the company stated it would divest or shut down any businesses which were not making “exponential value” for its shareholders.
It plans to invest in core food and its ecosystem to make it a robust long-term value driver. The plan is to build a hyperlocal e-commerce ecosystem by funding and partnering with other organisations ahead of the food sector.
While Zomato stated that it aspired to become a $10 billion business, it didn’t give a timeline for the same.
“We believe that the food delivery market in India is still nascent, and there is an opportunity to grow the market at least 10x over the next few years. In order to make this happen, we are going to continue investing heavily in market creation, in addition to investing in ecosystem companies around our food delivery business so that the cost of running a better food delivery business goes down with time,” Founder and CEO Deepinder Goyal stated in its quarterly earnings.
“We are currently in talks with various restaurant point-of-sale (POS) players, e-vehicle fleet operators, among others, to evaluate investments in these companies keeping the long term in mind,” he added.
Established in 2012, the parent company of Shiprocket has seen multiple pivots over the years. Its current avatar works with courier firms in India and connects merchants, consumers, and supply-chain partners across thousands of pin codes worldwide.
Apart from shipping services, Shiprocket also offers a technology stack to assist retailers in integrating their online stores such as Shopify, Magento, WooCommerce and Zoho for workflow, inventory, and order management.
The company has, so far, raised around $94 million, with the last funding coming in July when it raised $41.3 million. It was Series-D1 funding led by PayPal Ventures and existing investor Bertelsmann India Investments.
CureFit was founded in 2016 by Mukesh Bansal, co-founder of fashion marketplace Myntra, and Ankit Nagori, the former chief business officer of Flipkart. It last raised $75 million from Tata Digital, a wholly-owned subsidiary of Tata Sons in June. The valuation around that time was fastened at $850-900 million.
As part of this round, Zomato which had acquired Fitso for about $13 million earlier this year, is selling it to Curefit for a valuation of $50 million. Besides this, Zomato is financing $50 million in cash in Curefit. Cumulatively it will give Zomato a shareholding of 6.4 percent in Curefit.
As per this, Curefit’s valuation reaches at a sharp $1.5 billion.
Magicpin on the other hand was established in 2016 by Anshoo Sharma and Brij Bhushan and attaches hyperlocal merchants and brands with consumers.
Beginning this year, Ritesh Agarwal, founder of Oyo, had led a small round in Magicpin, which gave the business a valuation of $165 million. Here Zomato will be receiving a 16 percent stake for funding of $50 million in a $60 million round.
Zomato newly raised over $1.25 billion by listing on the public markets, holding a fresh issue of equity shares worth Rs 9,000 crore and an offer-for-sale (OFS) worth Rs 375 crore by current investor Info Edge.
The organisation, on November 10, published the July-September quarter results for the financial year 2021-22, which showed net loss widening by 87% to Rs 430 crore. The consolidated revenue in the quarter attained at Rs 1,024 crore as compared to Rs 426 crore in the same period last year.