Zomato Stops Operations of Restaurant Funding Platform ‘Zomato Wings

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Then, in November of 2021 Zomato announced Zomato Wings to help facilitate equity financing for cloud kitchens and restaurants by offering them to investors

Zomato has not been able to expand Zomato Wings due to multiple factors, including the fact that it was funding winter, sources claimed. There is a chance that Zomato Wings could be revived at some point in the future.

The foodtech company partnered with revenue-based financing platforms in the early 2021s to make it easier to finance restaurants however, it ended the pilot after 3 months.

The foodtech company Zomato has stopped operations of its ‘Zomato Wings’ platform that it introduced in the last quarter of 2013 to help restaurants get in touch with investors for funding according to sources who spoke with Economic Pitch

“Since April, we’ve been put off at Zomato Wings (Zomato Wings). The cold winter of funding has driven away investors,” a person aware of the situation stated.

There is a chance there is a chance that Zomato Wings might be restarted at the close in the calendar year. But the activities are stopped at present an individual who is who is aware of the issue said.

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Zomato Wings was launched in November of last year as an intermediary platform that was designed to provide equity financing to restaurants, brands and cloud kitchens. Zomato Wings brought together these companies and investors on one platform.

“As we work with investors more often, by connecting them with innovative restaurants, more restaurants would make use of this platform to raise funds, and the flywheel of the platform will make it a win-win situation both for investors and restaurants and in turn and to Zomato!” Zomato said in its blog article then.

But, when Zomato’s share price plunged during its first half of the year 2022 Zomato chose to focus on its main business.

The economic downturn in the world due to geopolitical tensions have not only affected the global equity market, but it also affected funding for startups. Investors became more cautious and cautious, 2022 has seen an abrupt drop in funding, with startups have had to cut jobs and reduced valuations within the Indian startup industry.

“The primary goal of Wings was to provide an intermediary platform to facilitate restaurant equity financing. Zomato was acting only as an intermediary service between restaurant owners and investors. Therefore, there’s no relationship to Wings with the company’s P&L,” a company spokesperson said to Inc42.

However, Zomato Wings didn’t respond to inquiries about the quantity of restaurants or brands that Zomato Wings facilitated funding in the first nine months or whether the platform is operating.

Failure to Take Off

Another source has told Economic Pitch “Our understanding is that they were looking to raise equity. They tried debt, and then wanted to do it internally. However, they were unable to increase the amount of debt they had in-house.”

Economic Pitch has also learned it was reported that Deepinder Goyal-led unicorn was planning to launch an initial pilot project in the beginning of this year, partnering with a variety of revenue-based financing platform (RBFs) to assist restaurants in financing. However, the pilot program was cancelled after just three months.

“RBF was a tiny trial to gauge the demand for alternative instruments, however the market was small, so we didn’t increase the size of the pilot,” the Zomato spokesperson said.

Zomato did not identify the kind of restaurants that would be the right fit to pilot. There was no sorting out of restaurants on the basis of the minimum requirements and there was a an absence of marketing for the pilot One of the sources stated.

RBFs, like GetVantage, Klub, Velocity are able to provide loans for new businesses and companies across industries to help grow their businesses.

“RBF is a brand new idea. How do you market the new option of funding without proper marketing?” another source claimed.

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The Focus Is on Profitability

In the month of June Zomato revealed the purchase of the loss-making startup for quick-commerce Blinkit at a price of $558 million to compete against its arch-rivals Swiggy’s instamart and Mumbai-based Zepto. It is worth noting that the price was a reduction of 44% in comparison to the $1 billion that Zomato had invested in the year before.

Zomato has also reduced its investment guidelines in Blinkit to $320 million, down from the previous $400 million. The company had already put in $150 million in the startup that offers quick-selling up to now.

This week, the company reported an improvement in its consolidated deficit up to INR 186 Cr for its June-July quarter of the fiscal period 2022-23 (FY23) from INR 360 crore in the previous quarter of last year. Zomato’s operating revenues soared 67% year-on-year scale to 1,413.9 Cr.

Zomato’s food delivery service reached breakeven at the fixed EBITDA levels in June quarter, the company is now looking to be able to breakeven with adjusted EBITDA for the entire business during the fourth quarter of FY23 to the second quarter of FY24.

“…internally We are looking to achieve this within the 4th quarter of the fiscal year. This is our internal goal that we share as a team , however we are of the opinion that if fail to meet that goal and fail to meet that goal, it will not be any later than Q2 FY24. Q2 FY24 is the September 2023 quarter to breaking even in an adjusted EBITDA in an Zomato scale,” the startup’s CFO Akshant Goyal told investors during a call after the company’s earnings call.

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