In October 2013, when Zomato raised money, it was valued at a little over Rs 1000 cr. At the time, there were questions around the valuation. Was it over valued? Is everyone banking on the greater fool theory? It’s hard to answer these questions, especially when the company is in its early growth phase.
How things pan out for the company and its investors depends a lot on how Zomato adds to its user base, improves on sales and at some point, starts its journey towards profitability. But for now, that future looks distant.
For the year ending March 2013, Zomato clocked Rs 30.6 cr in operating revenues and Rs 41.28 cr of loss. Remember, Zomato is in an investment phase and losses are inevitable (even Twitter wasn’t profitable at the time of its IPO). Right now, its running on the money it has raised from investors.
In October 2013, Zomato raised $37 mn (or Rs 222 cr assuming Rs 60 to the dollar) from Sequoia Capital and InfoEdge. The latter has invested a total of Rs 143 cr in the company and owns nearly 50% shares in Zomato (including diluted and converted shares).
Zomato is one of the few companies from India that have quickly scaled and built a world class product. If things go well with Zomato, as Ashish suspects, we’d be looking at a big deal, i.e. an acquisition, very soon.