Food delivery major Zomato, which was the first internet commerce platform to list on stock exchanges this year, has invested nearly $275 million across four companies over the past six months. The startup will spend another $1 billion over the next 1-2 years, with a large chunk of it likely to go into the quick-commerce space.
This, according to the company's CEO and Co-founder Deepinder Goyal, is a strategy inspired by the likes of Alibaba and Tencent, where they invested behind the ecosystem at large, created multiple M&A options for themselves, and in the worst case of M&A not panning out, realised windfall financial gains from their investments in market leaders across different categories.
"All our investments are a mix of math and chemistry. We are only investing behind founders we believe have the ability to create market leaders in their spaces -- so much so that we don't think we will ourselves be able to create similar businesses in-house that will beat the companies we are investing behind. Along with infusing capital into these category leaders, we will explore synergies and areas of collaboration amongst these partner companies to drive the best outcomes for the entire ecosystem, including our partner companies," the company said in a blogpost.
Zomato is also embarking on a divestment and shutdown business plan by only focusing on its core food delivery, dining-out and hyperpure (B2B e-commerce biz). As a part of this initiative, Zomato has sold its fitness-based mobile application to the health-tech startup CureFit for $50 million, and has invested another $50 million for a 6.4 per cent shareholding in CureFit.
Also read: Zomato Q2 results: Net loss widens to Rs 430 crore
"We have shut down our direct-to-consumer ("D2C") experiment in Nutraceuticals. Instead, we are choosing to back a platform play for all D2C brands (by investing in Shiprocket; more on this later). We are also shutting down our operations in Lebanon, which is the only international business we were left with (other than dining-out business in UAE) after shutting down the rest of our international operations last year," the company said.
The Gurugram-based company has invested $75 million in Bigfoot Retail Solutions Pvt Ltd ("Shiprocket") for a 8 per cent stake as part of a larger $185 million round. Shiprocket is a B2B logistics-tech company that enables online commerce by providing seamless shipping and fulfillment services to direct-to-consumer (D2C) brands and omnichannel sellers. It currently serves over 60,000+ brands and merchants across categories such as apparel, electronics, beauty and personal care, grocery, among others.
Zomato has also invested $50 million in Samast Technologies Pvt Ltd ("magicpin") for a 16 per cent stake as part of a total round size of $60 million. The company drives omnichannel growth for local retailers. "Including our $100 million investment in Grofers earlier in August 2021, we have now committed $275 million across 4 companies over the past six months," Zomato said.