Zomato’s Journey to Becoming a Unicorn: From Start-up to Global Success
The journey of Zomato, a name synonymous with food delivery and restaurant discovery, from a start-up to a unicorn is a fascinating tale. Empowering customers to discover new tastes and experiences, Zomato's humble beginning to a billion-dollar company is one of India's biggest success stories in the start-up ecosystem. So, how did it all begin? Let's find out.
The early days
Zomato, founded by Deepinder Goyal and Pankaj Chaddah, started in 2008. Both the IIT graduates were working at Bain & Company in Delhi when they noticed a problem. Colleagues often struggled to find menus of nearby restaurants and had to wait for a long time to catch a glimpse of the menu card. This observation sparked an idea. Why not create a website where people can discover restaurant menus online?
The idea was simple but effective. They named the website Foodiebay. It started as a small project but gained popularity in no time. People loved the convenience of finding menus online, and soon, Foodiebay became a go-to platform for food lovers in Delhi and NCR.
Rebranding to Zomato
Foodiebay was rebranded as Zomato after two successful years, and as they say, the rest is history. Support from investors and several rounds of funding helped Zomato build its valuation and a diverse portfolio of investors, including InfoEdge India, Vy Capital, Ant Financial, and Temasek.
Rebranding to Zomato was a crucial step, as the new name was short, memorable, and easy to pronounce. This made it a perfect fit for a brand aiming to go global. After tasting success in Delhi and NCR, it started branching out to other Indian cities like Chennai, Ahmedabad, Hyderabad, and Pune. By 2012, it expanded its services to Sri Lanka, the UK, Qatar, UAE, and the Philippines. Brazil, Turkey, and New Zealand were added to the list in 2013.
During this period, India was witnessing a smartphone boom and Zomato's founders wanted to cash in on it. They refined their technological prowess to launch their app and acquired foreign companies to increase their global footprint. In 2014, they acquired Poland's restaurant search service, Gastronauci and Italian restaurant finder, Cibando. In 2015, they acquired NexTable and Urbanspoon.
Share of struggles
Every success story has its share of struggles, and Zomato was no different. In 2015, Zomato experienced dwindling revenues, forcing it to make massive layoffs. 2016 was also slow, with further revenue losses, and it had to roll back operations in nine countries it had expanded into.
The unicorn journey had hit a roadblock but as Rocky Balboa had put it - Every champion was once a contender that refused to give up. Deepinder and Pankaj did just that, steering their dream effectively during the tough times. New initiatives such as cloud kitchen and Zomato Gold were taken during this period despite the latter attracting criticism that hurt the company's goodwill to some extent.
Gaining the unicorn status and going for IPO
The company's breakthrough moment came in February 2018, when it gained unicorn status in its series H funding round. Zomato share was listed on bourses on 23rd July 2021 at a valuation of over USD 13.3 billion with an issue price of ₹76 apiece. The IPO was successful, as it was oversubscribed 38 times.
Smashing numbers
Zomato recorded a 225% rise in revenues in the first half of FY 2020, and its adjusted revenues from FY 20 to FY24 witnessed a CAGR of 44% (see image).
Wrapping it up
Today, Zomato has expanded its business from food delivery to quick commerce. Zomato’s journey from a start-up to a unicorn is a testament to its innovation, adaptability, and customer focus. With a strong brand and a growing customer base, Zomato is well-positioned to script many more success stories in the coming days.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their research and consult with financial professionals before making any investment decisions. Read the full disclaimer here.
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