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SoftBank eyes Indian foodtech sector, in talks to invest in Zomato

17 May 2018

Hardly three months after raising $200 million from Ant Financials, Zomato is reportedly in talks to raise another fresh $200 million from Alibaba. The homegrown ride-hailing company said it was earmarking $200 million to grow Foodpanda.

That's great news for the consumers because it means that more discounts and promotions are on the cards. Soft-Bank, which has backed Flipkart and also Paytm, aims to now play the kingmaker in the food delivery market, the sources said.

And now, even as the Japanese conglomerate mulls over the big question of whether to exit Flipkart or not, it is busy sniffing around a whole new pie: India's booming food tech space.

After investing Dollars 400 million for a 21% stake in Paytm Mall, the Japan-based investment firm is now looking to invest in online restaurant discovery and food delivery firm Zomato, as per a report in The Economic Times citing sources. Ola acquired Foodpanda, a food ordering app, in December past year with plans to invest $200 million in the company. TOI has learnt the financing round will peg Zomato's valuation at $1.5 billion.

After reports that SoftBank was in talks with Swiggy, among other investors to invest in the FoodTech major, Economic Times now reports that the Japanese investor is exploratory talks to invest in Swiggy's rival Zomato.

It was reported in November 2017 that SoftBank was in talks to invest almost $250 million Swiggy, but no announcement followed yet. Sources said, while Zomato's financing round is in an early stage, Swiggy's $200-million fundraise has closed, valuing it at $1 billion after the investment. The major players who have been in the industry are Zomato and Swiggy. Meanwhile, China's largest e-commerce firm Alibaba Group Holding Ltd is looking to directly back Zomato in a $200-million financing round, which will value the start-up at $1.5 billion. The company also has hit 5.5 million monthly delivery mark in March. Latest numbers for Foodpanda were 40,000 monthly orders, while UberEats was at 20,000-25,000. '"Speaking to prospective investors is part of every day at Zomato, and for that matter, every high-growth startup. What will be critical is how these players are able to use their fleet to deliver more than just food", said an investor in an online food ordering platform on the condition of anonymity. Given the size of the pie, competition was sure to heat up - and it has, to the point that it's nearly a throwback to the red-hot days of 2014-15, when food tech startups were proliferating and raking in moolah. They scooped up funds in the first few month of being operational.

Experts are of the view that the food delivery sector, which is essentially a logistics-driven business catering to one need - food, allows big-ticket investors to pour in large amounts of capital. Zomato, last year, bought RoadRunnr, which became Runnr, in its attempt to take on Swiggy with its own delivery fleet.

SoftBank eyes Indian foodtech sector, in talks to invest in Zomato