Zomato continues to make more investments into start-ups/ emerging companies.
1. Rs 112.2 crore for 19.48% into Adonmo Private Limited
- Founded in 2016, Adonmo is focused on outdoor digital advertising.
- The Company reported a revenue of Rs 3.3 crore in FY 21.
- Investment by Zomato is cash consideration and values Adonmo at Rs 576 crore.
- The Company previously has raised a total of $ 3.3 mn (Rs 25 crore) from few angel investors and couple of venture capital funds.
2. Rs 37.39 crore ($ 5 mn) for 5% into UrbanPiper Technology Private Limited
- Founded in 2016, UrbanPiper helps restaurants with an integrated solution to manage their entire online business through centralised dashboards.
- The Company reported a revenue of Rs 6.3 crore in FY 21.
- Investment by Zomato is cash consideration and values UrbanPiper at $ 100 mn (i.e., Rs 7500 crore). Zomato’s investment is part of the bigger ongoing funding round of $24 mn.
- UrbanPiper has previously raised a total of $ 10.2 mn and counts Sequoia and Tiger as it’s early backers.
Though both investments are being claimed as strategic by Zomato, there is nothing exciting that comes to my mind for either. Reasons –
- Stakes in neither are any close to majority. Hence no effective control by Zomato at present.
- Adonmo is an advertising company and that too outdoor. Maybe Zomato will try to sell their solution to it’s tied up restaurants and push bigger brands advertisements. Or use their solution to market it’s own tied-up restaurants. May happen but nothing revolutionary.
- UrbanPiper prima facie looks more strategic. However, I believe solutions like these need API from other online platforms like Swiggy. Zomato’s stake in UrbanPiper in my personal view will create conflict. Why would Swiggy allow it’s customer data to be open to it’s competitors?
Therefore, personally I am not excited about either of the investments.
What is more interesting is Zomato seeking approval from RBI to set up a wholly owned NBFC.
What exactly would be the purpose of this NBFC?
- Loans to restaurants for opening new outlets, renovation, working capital? or
- Something completely different?
Guess only the time will tell.
However, one is point is getting more and more clear in my mind – the company has starting talking less and less about it’s core business and focusing more on more into identifying some alpha from somewhere to keep the story alive.
And it’s not that this strategy can not succeed. It can very well, as has happened many a times before.
However, I have no capability to invest based on Fear of Missing Out !