Zomato to connect restaurant owners to investors for fund raise

Online food delivery firm Zomato on November 30 said it will help restaurant owners raise capital to expand business in India by connecting them with the right set of investors.

"We constantly ask ourselves – what does it take for a great restaurant to grow further and faster? We believe it is a combination of great food, exceptional customer service, entrepreneurial team, loved brand, and easy access to capital," the company said in a statement.

Through Zomato Wings, the company plans to connect investors with restaurants.

Also Read: Zomato Q2FY22 results | Loss widens by 87% to Rs 430 crore

"By curating a set of restaurants and cloud-kitchens that could become rocketships if fuelled with equity capital, we hope to build the go-to platform for venture capital firms, angel investors, family offices, etc. that are looking to make private investments in restaurants and cloud-kitchens," the company said.

Especially since the pandemic, many operators have experienced difficulty in sustaining their restaurants given the heavy capital requirement.

As per Tracxn data quoted by Zomato, in the last three years, only about 25 restaurants and cloud-kitchens saw Series A or larger equity funding rounds.

Also Read: What should investors do with Zomato post Q2 earnings

Zomato's move could help restaurant owners connect with the right set of investors. But, the company will not co-invest in these deals.

"We are mindful that by owning an equity stake in one brand, we may raise some concern among other brands. Again, we do not want to compete with restaurants, and want to remain a fair and neutral platform for all restaurants," it said.

Zomato’s role would be limited to being a facilitator of fundraising for restaurants.