Mon - Sat: 10:00AM - 6:30PM

How much cash Zomato, Paytm, Ola, and Swiggy etc. are burning in India?


In today’s time, almost everyone is using some or the other online facilities.

Be it for e-commerce facility, or online food facility or even online cabs facility.
For such facilities, Apps like Amazon India, Zomato, Flipkart, Ola, Uber India, Paytm etc comes in one’s mind.

Well, this is all because of the amazing ideas these respective start-ups had.

India is considered to be using almost 90% of internet as compared to other countries. This states that India is a country which accesses such apps enormously.

Being the 2nd country with the largest population in the world, India brings out more scope for these startups to work here.

That is also one of the reasons why startups are growing in India.

Many of you might have some curiosity regarding how the particular startup established, how they raised money, what all challenges they had faced and what losses they have made?

So many questions we have.

NO worries, as your curiosity will be covered in here.

There are few startups which are covered like Zomato, Paytm, OLA cabs, Swiggy and Flipkart.

ZOMATO

zomato

Have you ever faced that time when you had to keep a bile of menu cards, just to order food?

Not only this, ordering them through call was more of a tedious work. As sometimes the call couldn’t connect, or restaurant might be busy.
This thing literally frustrated many people.

Well, startups like Zomato has made that easy for us.

Zomato initially known as Foodiebay has revolutionised the process of ordering as well as searching for restaurants.
Along with its review section which has recently been added, it has made it easy for the customers to decide which is the better restaurant out of all the bile.

Coming to the main questions that who founded Zomato and what struck this idea to happen in reality? Who funded this startup? And what are the losses it is facing?

For starters, Zomato has been founded by two people namely, Deepinder Goyal and Pankaj Chaddah.
Graduates from IIT Delhi, ended up working in a same firm called Bain in 2008.

zomato1

There was no such plan of establishing their startup, as the idea came gradually.

Just like every normal lunch happened at office, that day also same things happened, like people made a queue near cafeteria, collecting the menu cards and then calling up the specific restaurants and then ordering food.

Seeing this queue around the stacks of menu cards, gave Deepinder an idea.
He created a basic HTML website, scanned all the menu cards and uploaded of the website.
He did this because with this website, his colleagues could order food by just sitting on their desks. They no more need to form a long-lasting queue.

With such an amazing response he got, unintentionally he gave birth to a business Idea.

Deepinder still feels that they are just a ‘menu-card scanning company’.
As earlier also and today also they have a set of teams created specifically for this task.
They used to go outside, collect the menus, get new restaurants into business and scan their menu cards.

He also says that, “Everybody has the right to good food but not everybody has the access to good food and that’s the bridge which they are covering.”

From launching its business as a website called FoodieBay to changing its name to Zomato in 2010, this business had spread like anything.
And with this Zomato raised USD 16.7 million from Info Edge India, by giving them 57.9% stake between 2010-2013.

Not only in India, Zomato has spread over International market as well.
With this by 2014, it had completed another round of funding of USD 60million, from Info Edge, VY Capital and Sequoia Capital.

Coming to 2018, Zomato was successful in raising $210 million from Alibaba’s payment affiliate ‘Ant Financial’.
Zomato gave 10% of it stake to them.
With this the valuation of Zomato had reached to $2billion.

Seeing its profit doesn’t mean that they don’t face losses.

They do.

Especially when it comes to India. Recently in FY19 (Financial Year), Zomato had reported a loss of total USD 294million in India.
This loss was faced mostly because of the online food delivery business in India.

Zomato considers Delivery, Dining Out and Sustainability as its 3 main pillars. As according to FY19 the delivery revenue is alone USD 155 million. Also, Delivery contributes 75% to the total company’s revenue.

Apart from this, Zomato India also faced loss because of other reasons as well.
Now since we know that restaurants tie up with Zomato, and people get the benefits of heavy discounts from their favourite restaurants.

According to various sources, the NRAI (National Restaurant Association of India) has started a #logout movement.

In this movement restaurants affiliated with the NRAI are rising their voices against the deepening discounts provided to the customers.

They say that they want to “to detox customers from discount addiction and give the restaurant Industry freedom from aggregators who have distorted a vibrant marketplace by aggressive discounting and predatory pricing”.

zomato2

More than 2,000 restaurants stated that they would not be a part of 1+1 deal or 50% discounts on food and drinks.
NRAI stated that everyone loves a free meal but deep discounting is not good for the business. And this is the issue which is bringing stones on the path of Zomato and also other food aggregators.

There were many reasons for this logout movement to initiate but the main concern was the jealously.
According to facts, it has been mentioned that the food-tech aggregators have been able to raise an investment which is highest over the last four-five years than the traditional restaurants.

According to the NRAI report of India Food Services Report FY19, the capital which has been invested in food-tech space between the time span of  FY16-19 is around the $2.14 billion, whereas the capital investment in the restaurant segment totals only $635 million.

Well, clearly the fight between them is still not over. As customers loves a discounted meal, but when it comes to business restaurants are facing issue, but again no one ever mentioned such instance before.
Let’s see who wins this race. Stay updated for the next blog on who wins this race!!

OLA CABS

olacab

With the coming of online cabs our life has been made easy.

Being the 2nd largest population in the World, India faces issues in the transportation services. But with such online cab facilities is process is being sorted.

Presenting you with the rescuer of transportation problems, OLA Cabs.

Ola meant Hello.  

Ola is the online taxi-aggregation firm, founded by Bhavish Agarwal and Ankit Bhati.
Graduated from IIT-Bombay, they both were the best of friends from the first day of college when they met.

After getting graduation done in 2008, Bhavish started working at Microsoft Research while Ankit continued with his further education.
From college day, both of them were quite interested in opening a firm together.

After working for 2years in Microsoft, Bhavish quitted his job and came together with Ankit to start their own home.

With a little amount of money available with them, they started with many ideas and rejected them.

But one idea struck their mind. And thus, OLA Trips began.
Ola trips was specially made to provide people a gateway to plan weekend trips.

Although, this did not bring any success.
Then an incident happened, which changed Bhavish’s life.

Once Bhavish was travelling from Bangalore to Bandipur through a rented car. In the middle way the driver suddenly stopped the car and demanded for more money or he will not any further.

This incident came out to be a very shocking experience for him, but this left him with an idea that changed not only his but everyone’s life.

Bhavish saw the amount of potential that an extraordinary cab booking service could have in this country, as he thought that this will help better in understanding the plight of the travellers everywhere.
And with this in 2010, he changed his business model from a holiday and tour planning company to a taxi hailing firm.

And with this, OLA Cabs began, with its parent company called ANI Technologies Pvt Ltd.

Coming to the investment series, OLA was successful in getting the first round of Series A from Snapdeal founders, Kunal Bahl, Rehan Yar Khan and Anupam Mittal.

Bhavish said that “anyone can have a good business idea but to function it successfully one must have a scalable model upon which the business runs”.

With this by 2014 they spread in more than 100 cities pocketing more than a network of 2,00,000 cars. And as marked by the words of Bhavesh, they never owned a car instead they rented all the cars.

Ola was now handling over the 60% of the market share. It has raised many investments.

In 2014 only it raised USD 40million from the Stead view Capital and Sequoia Capital. In same year only they got investment from Softbank, Tiger Global and Matrix Partners India.

Coming to 2015 it was again successful in getting USD 403million from the Falcon Edge Capital, DST Global.

By the end of the year 2015 they again got the investment from Softbank, Tiger Global of around USD 500 million.

Again by 2016, Softbank invested USD 260 million. And their investment story continues…

By as they are getting profits and good customer feedback, Ola also faced certain losses which they are recovering through.

Ola which also got into the international market of Australia, New Zealand etc. they are also facing a major competition from Uber, its rival company. In the matter of presence Ola is ruling with 110 cities as compared to Uber ruling with 29 cities.

Ola has suffered a major loss as compared to the US-based start-up Uber which is also a taxi agrregator. The total loss was of around Rs.2311 crore, even though its revenue has increased significantly.

olacab1

According to the Corporate Affairs Ministry documents, Ola has narrowed its standalone losses significantly to Rs 2,676.7 crore, while the revenues were up to 44.6 per cent to Rs 1,860.6 crore in FY2018 compared to the previous financial year.

Since losses are being faced but instead of that also they are rising their revenue at a high pace, due to which, Ola has stated that it is on path to profitability. Well, they have started with this profitability as Ola not only has cabs, but it has started with, Ola autos, Ola bikes, Ola rentals, Ola cabs for outstations.

Let’s see how this possibility turns into realism in the coming future along with its constant rivalry rising with Uber.

Recently, Ola cabs has started a thing in which if a driver cancels a cab they will have to pay the price for that.

Getting cabs is itself a task. With such competition between the two firms this task has been tougher.

But the best thing for the customers due to such competition these firms bring out new opportunities for getting cashbacks on rides or discounted rides.

Sit back and enjoy wondrous benefits.

In order to know more about other startups, stay tuned for the next blog!!

By Anjali