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Zomato to deploy $1 billion over 1-2 years in startup investments, picks stakes in Shiprocket, Magicpin and Curefit

While the Shiprocket funding is part of a $200 million round which the company is raising, Curefit and Magicpin's are standalone equity rounds.

November 10, 2021 / 09:44 PM IST

Online food delivery platform Zomato on November 10 announced a $175 million investment across three homegrown startups — Shiprocket, Curefit and Magicpin — with an aim to diversify its bets following a blockbuster public listing.

It further plans to deploy another $1 billion over the next 1-2 years, with a major focus on the quick commerce space.

Moneycontrol had first reported that Zomato was in talks to invest $75 million in Shiprocket. Earlier on November 10, Moneycontrol was also the first to report that the company had a larger plan of making investments across a clutch of startups including Magicpin.

While the Shiprocket funding is part of a $185 million round which the company is raising, Curefit and Magicpin's are standalone equity rounds.

Moneycontrol had reported about the Curefit deal also earlier on November 10 adding that this deal will get it a unicorn tag.

Calling it a brutal prioritisation, the company said it would divest or shut down any businesses which were not driving "exponential value" for its shareholders.

It plans to invest in core food and the ecosystem surrounding it to make it a robust long term value driver. The aim is to build a hyperlocal e-commerce ecosystem by investing and partnering with other companies beyond the food sector.

While Zomato stated that it aspired to become a $10 billion business, it didn't give a timeline for the same.

"We believe that the food delivery market in India is still nascent, and there is an opportunity to grow the market at least 10x over the next few years. In order to make this happen, we are going to continue investing heavily in market creation, in addition to investing in ecosystem companies around our food delivery business so that the cost of running a better food delivery business goes down with time," Founder and CEO Deepinder Goyal said in its quarterly earnings.

"We are currently in talks with various restaurant point-of-sale (POS) players, e-vehicle fleet operators, among others, to evaluate investments in these companies keeping the long term in mind," he added.

Founded in 2012, the parent firm of Shiprocket has seen multiple pivots over the years. In its current avatar, it works with courier companies in India and connects merchants, consumers and supply-chain partners across thousands of pin codes in the country and around the world.

Apart from shipping services, Shiprocket also offers a technology stack to assist retailers in integrating their online stores such as Shopify, Magento, WooCommerce and Zoho for workflow, inventory, and order management.

The company has, so far, raised around $94 million, with the last funding coming in July when it raised $41.3 million. It was a Series-D1 funding led by PayPal Ventures and existing investor Bertelsmann India Investments.

CureFit was founded in 2016 by Mukesh Bansal, co-founder of fashion marketplace Myntra, and Ankit Nagori, former chief business officer of Flipkart.

It last raised $75 million from Tata Digital, a wholly owned subsidiary of Tata Sons in June. The valuation around that time was pegged at $850-900 million.

In August, Moneycontrol reported that Nagori was in talks to raise Rs 100 crore to build a house of food and cloud-kitchen brands. This came nearly a year after Nagori swapped his stake in to take control of its cloud kitchen arm

As part of this round, Zomato which had acquired Fitso for around $13 million earlier this year is selling it to Curefit for a valuation of $50 million. Besides this, Zomato is investing $50 million in cash in Curefit. Cumulatively it will give Zomato a shareholding of 6.4 percent in Curefit.

As per this, Curefit's valuation stands at a sharp $1.5 billion.

Magicpin on the other hand was founded in  2016 by Anshoo Sharma and Brij Bhushan and connects hyperlocal merchants and brands with consumers.

Earlier this year, Ritesh Agarwal, founder of Oyo, had led a small round in Magicpin which gave the company a valuation of $165 million. Here Zomato will be getting a 16 percent stake for an investment of $50 million in a $60 million round.

Zomato recently raised over $1.25 billion by listing on the public markets, comprising a fresh issue of equity shares worth Rs 9,000 crore and an offer-for-sale (OFS) worth Rs 375 crore by existing investor Info Edge.

The company, on November 10, announced the July-September quarter results for the financial year 2021-22, which showed net loss widening by 87 percent to Rs 430 crore. The consolidated revenue in the quarter stood at Rs 1,024 crore as compared to Rs 426 crore in the same period last year.

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Priyanka Sahay
Priyanka Sahay
Chandra R Srikanth
Chandra R Srikanth is Editor- Tech, Startups, and New Economy
first published: Nov 10, 2021 08:21 pm