Sequoia leads $37M funding round in Zomato

Gurgaon-based Zomato Media Pvt Ltd (formerly DC Foodiebay Online Services Pvt Ltd), which owns the popular restaurant and event-listing and review site Zomato, has raised a Rs 227.6 crore ($37 million) investment round led by Sequoia Capital. Existing investor and majority shareholder, Info Edge also participated in the round.

Techcircle.in had first reported that the restaurant listing site is in talks to raise capital from Info Edge and other investors.

Info Edge brought in Rs 57 crore by subscribing to convertible preference shares while Sequoia has invested Rs 170.6 crore.

Post this transaction, the total amount invested by Info Edge in Zomato Media to date will be about Rs 143 crore while its shareholding stands at 50.1 per cent on a fully converted and diluted basis. Prior to this round Info Edge owned 57.58 per cent of Zomato.

According to Techcircle.in estimates, Sequoia Capital is picking around 17.2 per cent stake as part of this investment giving Zomato a post-money valuation of around Rs 1,000 crore or around $158 million.

This would mean a sharp valuation bump of almost 3x given that the firm was valued at around $54 million early this year when Info Edge put in Rs 55 crore ($10.07 million then) more in the company.

Globally, the most valuable company in this space is Yelp with a market cap of around $4.5 billion.

The latest round takes up the total capital raised by Zomato to over $53 million to date.

"This financing will help us develop a product that will change the way people look for restaurant recommendations around them. We are excited to partner with Sequoia Capital as our venture partner to enable us succeed internationally, and we can look forward to seeing Zomato in many more countries over the next couple of years," said Deepinder Goyal, co-founder and CEO, Zomato.

"Zomato is the first Indian consumer internet company to build a significant international footprint, and we have made this investment because of our strong conviction in the founders, the world-class product they have built, and their ambitious global vision" said Mohit Bhatnagar, managing director, Sequoia Capital India Advisors.

Zomato was founded by IIT Delhi alumni and ex-Bain employees Deepinder Goyal and Pankaj Chaddah in July 2008.It started out with listings in only Delhi-NCR region and today has presence in across 35 cities in 11 countries. With this investment the company has also announced launch of its services in three more countries—Brazil (Sao Paulo), Turkey (Istanbul, Ankara) and Indonesia (Jakarta).

Also making its debut with this expansion is Zomato in local languages. In these three countries, Zomato will be available in Portuguese, Turkish and Bahasa respectively. In addition to these, Zomato has expanded its services within the UK from three cities to five, with the inclusion of Glasgow and Edinburgh. Of all these regions, the company has broken even in two markets—India and UAE—earlier this year. Over the next two years, Zomato plans to expand to 22 more countries across Europe, Southeast Asia, Australia and the Americas.

Currently, Zomato gets over 15 million visits across its web and mobile platforms every month. In the past one year alone, the traffic has grown by over 300 per cent, as per an official statement. Available across web, mobile and print, Zomato provides information such as menus, directions, contact details, pictures and user reviews, for over 160,000 restaurants.

More than half of Zomato's traffic is seen on its mobile apps. It is also seeing robust monetisation trend with 500 per cent growth in monthly billings as compared to a year ago.

The firm generated revenues of Rs 11.37 crore in FY13 against Rs 2.04 crore in the previous year. It has three revenue channels—ads, event ticketing and restaurant booking (through customer leads generated through Zomato).

Ad revenues grew almost seven times, from Rs 1.59 crore in FY12 to Rs 10.88 crore in FY13. This represented 95.7 per cent of the total operational revenues of the firm. Ads had contributed around 78 per cent of revenues in the previous year.

Event ticketing, a business that Zomato entered in late 2011, showed a relatively modest growth. The firm clocked revenues of Rs 27.4 lakh in FY12, which grew around 22 per cent to Rs 33 lakh in FY13. In event ticketing, Zomato competes with big players such as BookMyShow and KyaZoonga.

It had an EBITDA loss of Rs 10.03 crore during FY13.

(Edited by Joby Puthuparampil Johnson)