Venture Capital and Private equity

1. 1
Venture Capital and Private Equity
Group Assignment
Zomato – Venture capital and Private equity – Ant Capital
Submitted By
Karan Trivedi 201611225
Naveen Joshi 201611218
Pushpanjali 201600337
Keshav Gupta 201611205
Jaydev Patel 201611226

2. 2
About The Company:-
Zomato
This is the online restaurant discovery and food ordering business. It has clear
leadership in India and UA E, which is considered its home market. Today,
directly or through acquisitions, it has a presence in 23 countries including India,
UK, Canada, Czech Republic, Slovakia, Poland, Portugal, UA E, NZ, South
Africa, Turkey, Philippines, Indonesia, Italy, Brazil, Ireland, Qatar, Sri Lanka,
Chile, Australia, US , Lebanon and Malaysia.
The business recorded around 120 million sessions in March, 2017. Of these, over
75% were through mobile (web and app). Today, it has a database of 1.27 million
restaurants across the world.
 The service began as Foodiebay, and in November 2010 was renamed as Zomato.
 Between 2010- 13, Zomato raised approximately US$16.7 million from Info Edge
(India) giving them a 57.9% stake in Zomato.
 By 2011, Zomato launched in Bengaluru, Pune, Chennai, Hyderabad and Ahmedabad
and introduced smartphone applications. With the introduction of [[.xxx]] domains in
2011, Zomato also launched zomato.xxx, a site dedicated to food Porn. The Company
also launched a print version of the website content, "Citibank Zomato Restaurant
Guide", in collaboration with Citibank in May 2012, but it has since been
discontinued.
 In September 2012, Zomato expanded overseas to the United Arab Emirates, Sri
Lanka, Qatar, the United Kingdom, the Philippines, and South Africa. In 2013, the
company launched in New Zealand, Turkey, Brazil, and Indonesia with its website
and apps available in Turkish, Brazilian Portuguese, Indonesian, and English. In
November 2013, it raised an additional US$37 million from Sequoia Capital and Info
Edge (India).
 In April 2014, Zomato launched its services in Portugal. In July, it made its first
acquisition by buying Menu-mania for an undisclosed sum. The company pursued
other acquisitions such as Lunchtime.cz (from the Czech Republic) and Obedovat.sk
(from Slovakia) for a combined US$3.25 million.
 In September, Zomato acquired Poland-based restaurant search service Gastronauci
for an undisclosed sum.In October, the firm launched its services in Canada. Shortly

3. 3
after, in November, it extended its reach to Lebanon and Ireland as well. In
December, it acquired Italian restaurant search service Cibando.
 In November 2014, Zomato completed another round of funding of US$60 million at
a post-money valuation of ~US$660 million. This round of funding was being led
jointly by Info Edge and Vy Capital, with participation from Sequoia Capital.
 Zomato acquired Seattle-based food portal Urbanspoon for an estimated $60
million.The acquisition marked the firm's entry into the United States, Canada and
Australia, and brought it into direct competition with Yelp, Zagat and OpenTable. In
the same month, the firm also acquired Mekanist in an all-cash deal.
 April 2015 saw another round of funding for Zomato, led by Info Edge, Vy Capital
and Sequoia Capital, this time of US$50 million.In September 2015, Zomato raised
another US$60 million, led by Temasek, a Singapore government-owned investment
company, along with Vy Capital. Zomato's total funding to ~$225 million which
comes from a close set of four investors: Info Edge, Sequoia India, Vy Capital, and
Temasek Holdings.
 In April 2015, Zomato acquired Delhi based startup MapleGraph that built
MaplePOS. Zomato renamed the MaplePOS product to Zomato Base. In the same
month, the firm also acquired NexTable, a US-based table reservation and restaurant
management platform.
 In February 2017, Zomato in a company's blog had explained the concept of cloud
kitchen. With its cloud kitchen, the company will help the restaurants to expand their
presence without incurring any fixed costs.
 In September 2017, Zomato claimed that the company had "turned profitable" in the
24 countries it currently operates in. Furthermore, Zomato announced that the "zero
commission model" is to be introduced for partner restaurants.

4. 4
Business Model of Zomato
1. Advertising
• Banner ads on web and mobile apps relevant to a user’s search of restaurants in
an area.
• Events, sponsored spots in collections and corporate tie-ups.
2. Digitize restaurant menus
 Provide relevant information (including map coordinates, Pictures etc.).
• Regular data updating through feet on street beats.
3. Generate ratings and reviews and enable picture uploads from users.
4. Provide a ‘wow’ user experience by:
• Search capabilities by location, cuisine, dish names.
• Convenience through a high quality mobile app.
5. Food ordering on the web and mobile app
• Online food ordering launched in India and UA E (Dubai and Abu Dhabi) from
FY 2016.
- Delivery done by restaurant or by Zomato’s logistics partners.
- A round 2 million plus orders processed in March 2017.
6. Table reservation
 Active in 10 cities in India, UA E, Australia and the Philippines.
7. Table reservations (Zomato Book)
 Across eight cities globally.
About Food-Tech Market:-
The food-tech sector in India went through a period of turmoil in 2015, when
several startups had shut down, and a period of consolidation and correction last
year. The situation turned for the better in 2017 as food-tech companies fine-tuned
their business models and improved their unit economics.
The consolidation wave in the food-tech space saw as many as 24 mergers and
acquisitions take place between 2015 and 2016. In 2017, two predominant
models—restaurant marketplaces and cloud kitchens—evolved following the

5. 5
upheaval. The recovery was led by a reduction in delivery costs and increased
penetration in existing markets.
“Consolidation is not negative, it is a sign of progression,” Saurabh Kochhar, co-
founder and chief executive of Food panda India, had said at a News Corp Circle
summit this year, heralding a sign of things to come for the food delivery platform.
Fast forward six months and homegrown cab-hailing major Ola agreed
to acquire the Indian business of Foodpanda from its German parent Delivery Hero
in an all-stock deal.
Ola’s second shot at the food delivery business is one of the most significant
developments in an industry that has been growing at a blistering pace over the
past couple of years.
According to research and advisory firm RedSeer Consulting, the industry grew
150% from $120 million in 2015 to $300 million in gross merchandise value in

6. 6
2016. The industry stayed at the same level in 2017 even as food-tech crawled
back into a phase of revival from the rough days. According to RedSeer, the sector
is on course to hit $1.5 billion by the end of 2018 and $2.5-3.5 billion by 2021.
Statistics from VCCEdge, the data research arm of News Corp VCCircle,
corroborate this—the food delivery space saw 63 deals worth $274 million in
2015. The number of deals fell to 43 in 2016, amounting to a mere $78 million.
Though 2017 saw 20 funding deals, the total cumulative value of those investments
was $124 million.
Food-tech in 2018
Companies in the food-tech space are increasingly moving towards integrated
models with multiple monetisation channels. This is because the low ticket size of
transactions, and high delivery, customer acquisition and operational costs make it
very expensive to run a pure play food-tech business, Satish Meena, senior forecast
analyst at Forrester Research, had told VCCircle. He believes a standalone food
delivery business will be difficult to sustain, and 2018 will witness category
consolidation, where companies will offer customers multiple products and
services.
A case in point is Swiggy’s recent launch of a new supply business vertical. The
food delivery platform subsequently acqui-hired gourmet Asian food startup
48East to strengthen the new vertical.
Experts such as Meena and Anup Jain, managing director of retail consulting firm
Redback Advisory Services, that VCCircle spoke to earlier are bullish on the
proliferation of cloud kitchens in the New Year.
Besides cloud kitchens, Meena and Jain expect business-to-business catering,
packaged foods and the health food category to scale in 2018.
Jain also said he expects little investment at the growth and seed stage, with
investors placing their bets on larger players in order to ensure sustainable business
models.
The year also saw cloud kitchen operator FreshMenu break into the top-five club
of online food-ordering companies, thanks to an impressive increase in revenue for
2015-16. It got a fix on the cloud kitchen model much before most other food-tech
startups, and stuck to it.
Competition:-
India’s food tech space is currently locked in a three way between Zomato, Swiggy
and Foodpanda. The three companies have come from very different places to end

7. 7
up competing in the food delivery space — Zomato started off as a restaurant
discovery and content platform all the way back in 2008, Swiggy is a homegrown
player that specializes in food delivery, and Foodpanda is a global brand founded
by Germany’s Rocket Internet. This is how their financials looked in FY 2017.
Revenues
Zomato leads the pack as far as revenues are concerned, but that’s expected — in
addition to its food delivery, Zomato runs a restaurant discovery platform, through
which it makes money via advertisements. Zomato has also been experimenting
with loyalty programs, such as Zomato Gold and Zomato Treats. Zomato’s
revenues were Rs. 332 crore in FY 2017. It was followed by Swiggy,
which reported revenues of Rs. 133 crore. Foodpanda came in third with revenues
of Rs. 62 crore last year.
Losses
Even though the sector has made a recovery over the last year, the three companies
still make losses. Like with revenues, Zomato also led the pack with losses — the
company lost Rs. 389 crore last year. Swiggy was second with losses of Rs. 205
crore. Foodpanda, the smallest player, also made the least losses — it lost Rs. 45
crore last year.

8. 8
Losses per rupee of revenue
Even though Foodpanda is the smallest player among the three, its losses were the
least compared to its revenues. Foodpanda lost 0.72 paise on every rupee of
revenue it earned during the year. In comparison, Zomato lost Rs. 1.17 on every
rupee of revenue it earned. Swiggy was the second largest player by revenue, but
has the worst revenue-loss ratio — it ended up losing Rs. 1.54 for every rupee of
revenue it earned.

9. 9
Zomato Growth strategy
1. Advertising
 To differentiate themselves from their competitors, Zomato concentrated on adding
approx. 18,000 new places to eat from. Along with they also decorated many special
features, such as pointed to particular dishes or opening times”.
2. Mergers and acquisitions:-
 Online restaurant ordering and discovery platform Zomato acquired logistics
technology startup Sparse Labs yesterday, its 11th acquisition in eight years of its
operations.
 To be the largest resource in food supply market, Zomato bought urbanspoon, a
leading restaurant service providing portal for $52 million to enter US, Canada and
Australia to leverage local insights and experience and to expand their business in
overseas seeing the future goal and objective.
 Food technology start-up Zomato Media Pvt. Ltd has acquired delivery start-up
Runnr as part of a widely expected, all-stock deal that would help the former
significantly shore up its food delivery business, amid intense competition from
rapidly-growing rivals such as Swiggy.
3. Business to Business to Consumer approach.

10. 10
 Zomato recently changed its strategy to split its operational markets into two parts -
full stack where Zomato has high levels of traffic and intends to monetize through ad
sales and enterprise markets where the traffic is not adequate yet and the focus will be
on its enterprise products.
 Six months ago, they had to actually invest a lot in these markets to grow the traffic
to a level where they could monetize them. But, now since they have these enterprise
products, Zomato thinking of a B2B2C.
Venture partner and private equity player’s details
1. Info Edge
 Info Edge has an in-depth understanding of the Indian consumer internet domain.
With years of experience in the domain, strong cash flow generation and a diversified
business portfolio, it one of the very few profitable pure play internet companies in
the country.
 The company was incorporated on May 1, 1995 under the Companies Act, 1956 as
Info Edge (India) Private Limited and became a public limited company on April 27,
2006. Starting with a classified recruitment online business, naukri.com, Info Edge
has grown and diversified rapidly, setting benchmarks as a pioneer for others to
follow. Driven by innovation, creativity, an experienced and talented leadership team
and a strong culture of entrepreneurship, today, it is India’s premier online classifieds
company in recruitment, matrimony, real estate, education and related services.
 Info tech has investmets in following companies
a) Naukri Internet Services Private Limited and Jeevansathi Internet Services Private
Limited, which own internet domain names and related trademarks;
b) Allcheckdeals India Private Limited which provides brokerage services in the real
estate sector in India;
c) Info Edge (India) Mauritius Limited primarily to make overseas investments of the
company (under liquidation);
d) Applect Learning Systems Private Limited which is engaged in business of
kindergarten to class12 (K-12) assignment and tuitions through its online portal
Meritnation.com;
e) Zomato Media Private Limited, which operates an online food guide portal
zomato.com; and

11. 11
f) MakeSense Technologies Private Limited, owner of proprietary software for semantic
search which augments search capabilities for both recruiters and job seekers,
principally on naukri.com.
2. Sequoia Capital
 Sequoia capital is an American venture capital firm. The firm is located in Menlo
Park, California and mainly focuses on the technology industry. It has backed
companies that now control $1.4 trillion of the combined stock market value.
Sequoia manages multiple investment funds including funds specific to
India, Israel, and China.
 The firm invests in both public and private companies. It specializes in incubation,
seed stage, startup stage, early stage, and growth stage investments in private
companies. The company invests mainly in companies based in the United States
for early and seed stage investments. It invests between $100,000 and $1 million
in "seed" stage, between $1 million and $10 million in early stage, and between
$10 million and $100 million in companies that are in their growth stage.
 Sequoia capital investments
a) Sequoia Capital has invested in over 250 companies since 1972, including Apple,
Google, Oracle, PayPal, Stripe, YouTube, Instagram, Yahoo! and WhatsApp.
3. Ant Financial Services Group
 Formerly known as Alipay, is an affiliate company of the Chinese Alibaba Group.
Ant Financial is the most valuable fintech company in the world. It operates Alipay,
the world's largest mobile and online payments platform as well as Yu’e Bao, the
world's largest money-market fund. It also runs the Sesame Credit credit rating
system. As of September 2017, Ant Financial unveiled its facial recognition payment
technology through its Alipay services.
 Ant Financial is also looking to strengthen its foothold in South-East Asia, India
and markets such as New Zealand and Australia. In August, Ant tied up with
Yelp Inc. in the US to cater to Chinese tourists there. The partnership let Ant
Financial users make payments in restaurants across US.
 Ant financials investments
a) Alibaba thus becomes the biggest investor in Paytm.
b) The Chinese company also invested in Snapdeal
c) The Chinese company also invested in bigbasket.

12. 12
Zomatos Fund rasing history:-
 2010 Info Edge had invested about Rs 4.7 crore (around USD 1 million) in to
fund Zomato.com's (then Foodiebay.com) product development, sales and
marketing efforts, Zomato.com said in a statement today.
 2013, Zomato raised approximately US$16.7 million from Info Edge (India)
giving them a 57.9% stake in Zomato.
During series (venture, A) rounds of funding equity stake
Term sheet
Securities:-Series A preferred stock with warrant options.
Proceeds $4.5M
Announced Date Transaction
Name
Number of
Investors
Money
Raised
Lead Investors
Feb 1, 2018 Series I (PE
round)
1 $200M Ant Financial,
Alibaba
Apr 27, 2017 Series H 4 $20M Sequoia Capital
Sep 7, 2015 Series G 2 $60 M Temasek Holdings ,
Vy Capital
Apr 10, 2015 Series F 3 $50 M Info Edge, Vy Capital
Nov 18, 2014 Series E 3 $60 M Info Edge, Vy Capital
Nov 6, 2013 Series D 2 $37 M Sequoia Capital
Feb 21, 2013 Series C 1 $10 M Info Edge
Sep 1, 2012 Series B 1 $2.3 M Info Edge
Sep 1, 2011 Series A 1 $3.5 M Info Edge
Aug 1, 2010 Venture round 1 $1 M Info Edge

13. 13
Rights and preferences:-
 Non-cumulative dividends.
 A liquidation preference equal to sell of share prize.
 Voting right.
Name Amount( $ millions) Holding %
Management 42.42
Info edge ( by exercise
preference share issue)
1+3.5=$4.5 M 57.58
When Sequoia capital invested in Zomato (Zomato Valuation = $270millions)
Name Amount( Rs Crores) Holding %
Management 32.5%
Info edge (( by exercise
preference share issue)
$4.5+2.3+10 =$16.7M 50.3%
Sequoia Capital $37 17.2%
Before ant capital entered (Zomato Valuation = $945millions)
Name Amount( Rs Crores) Holding %
Management 24.0%
Info edge $16.7+$110M=$126.7M 44.7%
Sequoia Capital $37+$20=$57M 22.3%
Others $60M 9%
Ant capital entry (Zomato Valuation = $1.1 billion)
Name Amount( Rs Crores) Holding %
Management 22.0%
Info edge $126.7-$50M=$76.7M 32%
Sequoia Capital $37+$20=$57M 20.0%
Ant financial $50+$150=$200M 18%

14. 14
Others $60M 8%
 Ant buy 6.67% of equity - 32629 shares of info edge at $50M.
 New Equity issue $150M, 73378 shares.
Total no. of zomato shares = 553568
Internal Rate of Return
 Infoedge invested following amount from 2010 to 2015, and in 2018 Ant bought 6.67%
of equity from infoedge, currently its holding 32% of stack in zometo. According to that,
infoedge is getting an Internal rate of return (IRR) of 42.67%.
Infoede Investment IRR
01-04-2010 -1
01-09-2011 -3.5
01-09-2012 -2.3
21-02-2013 -10
18-11-2014 -60
10-04-2015 -50
01-02-2018 448
Infoedge IRR 42.67%
Financials
2015 2016 2017
Cash and Cash Equivalent 443.12 458 476.39
Other assets 1,918.54 2,647.16 1,850.33
Total current assets 2,361.66 3,105.16 2,326.71
Total non-current assets 4,126.91 3,439.90 547.85
Current liabilities
Financial liabilities 21.81 4,065.43 0.55
Other liabilities 700.67 620.11 753.61
Total current liabilities 722.48 4,685.54 754.16
Total non-current liabilities 34.04 60.52 78.59
Net assets 5,732.05 1,799.00 2,041.82

15. 15
 In 2018 and 2016, Zomato is going to have less cash burn. Which means there will be a
decrease in the expenditure
 Zomato acquired runner last year, which changed its business model with vertical
integration. It increased operational efficiency, as well as increased revenue. Zomato is
going to increase their profit margins in next 2 years as well.
2015 2016 2017 2018E 2019E 2020E 2021E
Revenue 966 1839.47 3322.73 6164.6 11404.52 15966.32 22352.85031
Interest Income 126.82 123.04 123.04 123.04 123.04 123.04
Depreciation and
Ammortization 507.9 1109.07 1732.27 2230.83 2480.11 2680.11
Interest Expenses 35.33 56.53 56.53 56.53 56.53 56.53
Income Tax Expenses - -
Profit/Loss
-
5901.76
-
3890.07
-
338.917 5369.987 8908.472 14166.15079
Profit/loss after tax 0 0 0 3758.991 6235.93 9916.305555
Other Comprehensive Income 217.55 2.19
Total comprehensive
income/Loss
-
5684.21
-
3887.88
Expenses 2606 7808 6047.2 4837.76 3870.208 4644.25 5573.09952
2016 2017 2018 2019 2020 2021
EBIT -5866.43 -3833.54 -48.6870457 6272.2576 11120.89 18776.59811
Depreciation 507.9 1109.07 1498.57 1693.32 1927.02 2127.02
Capex 4150 779 389.5 194.75 233.7 280.44
Change in WC 3219 -3152 -450 -500 -600 -824
FCFF -6289.53 -6655.47 610.3829543 7270.8276 12214.21 19799.17811
TV 138594.2468
FCFF+TV -6,289.53 -6,655.47 610.38 7,270.83 12,214.21 1,58,393.42
Share
₹
51,950.73 ₹ 89,011.96
Valuation $ 1,369.41 (Million)
Share Price $ 2,473.80

16. 16
 The company currently having negative profit as well as negative cash flows. It will turn
profitable from 2019 itself, and free cash flow will turn positive by this year itself.
It has been projected that revenue will increase by 85% in 2018 and 2019.
 Valuation of the company as per the projection is $ 1.37 billion, Ant financial has done
valuation of zomato at 1.1 billion. Overall it has got excellent internal rate of return (IRR)
of 42.67% with the time horizon of 8 years.
References
a) https://www.vccircle.com/alibabas-payment-affiliate-invests-200-million-in-
zomato/
b) https://qz.com/678667/zomato-is-proof-that-the-valuation-of-indian-startups-
is-a-dangerous-bubble/
c) http://infoedge.in/pdfs/annual-report-2015-16.pdf
d) https://yourstory.com/2018/02/ant-financials-pumps-200-million-zomato-1-1-
billion-valuation/
e) https://www.just-eat.co.uk/