Zomato has been making waves in the market with its ground-breaking initial public offer (IPO) that took centre stage. After a stellar debut on market on July 23, the company has officially entered the ‘Top 100 Listed Companies’ in terms of its value which now stands at over Rs 1 lakh crore in market capitalisation. This IPO was by far one of the largest to date and puts the food delivery giant in the unique category of one of the only Indian Internet-based companies to get listed on the bourses on Friday. However, the industry titan wasn’t always a behemoth. Deepinder Goyal and Pankaj Chaddah started the company in 2008 as a restaurant and food listing website called, ‘Foodiebay’. Hailing from IIT-Delhi, both the founder met when they were working at a firm called Bain Consulting.
What started as a relatively small idea, had exploded onto the scene by 2011 as it became a one-stop-shop for anyone looking for restaurant recommendations, bookings, ratings, reviews and so on. The company managed to raise its first bit of funding from Info Edge for Rs 60 lakh that laid the groundwork for what it is now. As Zomato finds itself on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) on Friday, it helps to know where the founders started from, in order to understand how far they have come. The stock got listed on the BSE at Rs 115 and on NSE was listed at Rs 116. This is a 51.32 per cent and 52.63 per cent premium increase over the issue price respectively.
In a letter to his shareholders, Deepinder Goyal, the CEO and founder of Zomato thanked several other start-ups such as Ola, Uber, Flipkart, Paytm and even the e-commerce giant Amazon. He thanked them for the foundations they laid over the years in India that has enabled Zomato to take advantage of the internet space which has opened up significantly. It is this platform that Goyal views as the enabler behind the success the company embraces today.
At one point, Zomato was only making its revenue through advertisements on its website. It wasn’t until November of 2013 that Sequoia Capital India led a funding round of $37 million for the company. At that time both investors, Sequoia and existing investor Info Edge, only saw a $150 million valuation when they looked at Zomato. The story of Zomato and its founders is one of an underdog on the rise, as no one could have imagined that it would become a front-runner.
Goyal and Chaddah started this journey more than a decade ago. Goyal was not very fond of the spotlight and preferred to work rather than be the face of an entity in the public eye, but he was and still is a man bent on achieving new heights. The founder’s attitude of always wanting to win, set him in a league of his own as he keeps pushing the envelope. This is a major reason why the company came as far as it did.
The Covid-19 pandemic was an unexpected and drastic setback for the company. The company’s Red Herring Prospectus (RHP) revealed that Zomato’s revenue fell by almost a quarter year-on-year to Rs 1,994 crore in FY21. The losses did however narrow eventually from Rs 2,363 crore in FY20 to Rs 812 crore in FY21. Despite this bump in the road, Goyal was intent on pushing onward. Now the company stands as a listed, public company. This is likely miles beyond what the founder could have envisioned at the beginning.
Going forward, Zomato will be launching its new grocery services on the Zomato App soon. This comes after the company invested $100 million in Grofers. This service was initially launched on the platform during the time when the pandemic was raging, but as a result of the situation, it was shut down. After the company’s historic debut on the market, it is looking to relaunch this feature. Only time will tell what other innovative schemes Goyal will cook up for this path-breaking company.
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