INDIA – Indian multinational restaurant aggregator and food delivery company Zomato is furthering its q-commerce ambitions by investing US$100 million in Blinkit, one of the leading startups in the sector.
The investment is a part of a larger US$400-million funding Blinkit is looking to raise from Zomato and other investors, which is expected to close in the next two quarters.
The funds are being raised through convertible notes from Zomato, which will later be converted into equity, ET reported citing people privy to the investment.
The current financing is in addition to the US$100 million that Zomato invested in the company and its wholesale entity Hands on Trades last year.
Earlier in November, ET reported Zomato may invest US$500 million in Blinkit to push its quick commerce ambitions, potentially valuing the company at US$1.5 billion.
However, the volatility in the public markets and its effect on Zomato’s share price has delayed the round, which was expected to be closed by March.
Zomato has however said that it continues to be bullish on quick commerce and would potentially invest an additional US$400 million in the space over the next two years.
“We are very bullish on the product-market fit, unit economics, and growth trajectory of the quick commerce category,” Zomato said during a December earnings call
“It reminds us of the food delivery category a few years ago, when many platforms competed over a large and growing market but ultimately only the few that delivered exceptional experiences to their customers survived.”
While informing employees of the latest investment, Blinkit chief executive Albinder Dhindsa wrote that the company would continue to focus on growth, reducing its burn rate, and improving its speed of execution.
“We have closed our next fundraise ($100 million) and will have money coming into the bank over the next week. We have come a long way in the last eight months by transitioning the business to the largest instant commerce player in the space,” read Dhindsa’s note.
Blinkit had first announced its pivot to the 10-minute instant grocery delivery space in August 2021, and initially launched the service in the top 12 Indian cities.
The company has an on-ground workforce of 30,000 and has opened 450 new warehouses and dark stores to scale its quick commerce plans.
The company has taken tough calls, such as shutting 40 of its warehouses, to streamline operations.
With more funds coming in, Dhindsa told his employees that the company’s “next chapter should give Amazon a run for its money”.
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