Zomato is reportedly in discussions with Chinese private equity major Primavera Capital, existing backer Ant Financial and other investors for the new round of funding
Online food delivery platform Zomato is in talks to raise between $500 million and $1 billion in a new financing round to gear up against its rivals, according to a report by The Economic Times. Last month, rival Swiggy raised $1 billion funds, valuing the startup at $3.3 billion.
Zomato is reportedly in discussions with Chinese private equity major Primavera Capital, existing backer Ant Financial and other investors for the new round of funding.
"Primavera may invest about $200 million in the upcoming round and the remaining could come from Ant Financial. The company is also talking to other investors to syndicate this round," a source told the paper.
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Valuation for the new round of financing could not be determined, according to the report. However, in the previous round of funding in October, Zomato was valued at $2 billion.
"There is a new round and we are talking to potential investors (including Ant Financial) for our new fundraise. This will be at a premium to the last round as the company has more than doubled in size since the last round was finalised," a Zomato representative told the paper.
After receiving around $410 million last year from Ant Financial, Zomato has been keen to get an outside backer, another source told the paper. According to the report, Zomato has also been in talks with Ant Financial's parent Alibaba and Ctrip, a travel giant from China, for a long period to raise funds.
Read: Swiggy's latest funding blitzkrieg bound to shake up its rivals
"The easy option for Zomato is to raise the new funds from Ant Financial, considering they are now the most influential, deep-pocketed investor on the capitalisation (or cap) table. But they have been engaging with a set of new investors and looking to close the deal over the next few months," a source told the paper.
Zomato's move comes days after its rival Swiggy raised $1 billion. Swiggy's funding round has given its already envied valuation a massive boost but has created a huge barrier for other players in the market.
"Zomato had not anticipated Swiggy to raise $1 billion, it was more on the lines of $600 million in primary money that they thought would come into the firm. This has made them recalibrate their new financing so that they can continue to fight Swiggy," the source told the paper.
Read: Zomato to expand food delivery business to 100 cities
Industry sources peg the monthly burn rate of the company close to $20-23 million. Both companies are losing $30-40 million each per month because they offer heavy discounts to customers, according to the report.
Both Zomato and Swiggy face competition from ride-hailing companies Ola and Uber that are now pushing into the market with their own food delivery platforms.
