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Softbank pulls out of a possible investment in Zomato only to invest in Swiggy

Zomato is a company which is trying to shake off competition from its arch rival Swiggy. It has tried numerous times to get ahead of its nemesis in the food-delivery business but has failed time and again. With a food-delivery business to grow rapidly in the coming future, the fight is only going to get worse as both the companies are looking to stuff their inventory with as much cash as possible. Swiggy has already done that while Zomato is falling behind somewhat.

Zomato is a decade and a bit older while Swiggy is just about half a decade old. Zomato’s experience, however, in food-delivery is lesser than that of Swiggy. Swiggy only entertains food-delivery while Zomato does a lot of other things. The concentration on one thing is where Swiggy moves ahead of Zomato. The latter, however, is winning hearts with its Gold memberships and Piggybank feature. Swiggy is a failure in that terms. These comparisons can conclude that both the companies are the best in some things while not so good in the other.

That said, Swiggy’s recent grab of $1 billion has left Zomato with a lot of thinking to do. While Zomato was trying to sort out the delivery scandal, Swiggy was busy leaving its rival far behind. However, this has not stopped the restaurant-finder app to go ahead with its plans. Zomato is also looking to reinvent its arsenal with a $1 billion in funding from existing investors in Ant Financial and AliPay. Primavera Capital is also going to join this funding round according to rumors.

Softbank, one of the most voracious investors in Indian startups, was interested in funding Zomato. However, that interest has been cooled down and it is now looking elsewhere. There are people in close proximity of the company telling that a lot of Chinese influence and one of the portfolio company Meitung-Dianping, bet its money on Swiggy. That made Softbank lose its interest in Zomato.

This comes as a huge blow to Zomato as Softbank is a major investor and could have invested a huge sum of money in the company but will now look at Swiggy and invest there. This is a huge blow not only because it has pulled out of a deal with them but it is going to invest into their direct rival. Zomato, however, still looks unfazed as there has been no official comment on it. A couple of news came out back to back in a day. Firstly Zomato’s eyes on another funding and then a major investor backing out. A sweet-bitter day for Zomato at the office.

However, it still pretty much looks like Zomato will secure fundings from Ant Financial and Primavera Capital. That will help the Indian giant in keeping up with Swiggy. The company will also hope that Swiggy will not raise another investment in the meantime as Swiggy’s CEO and Softbank’s main man Son have met in the last few days. It will be interesting to see how this battle goes as both the companies are looking to push out Ola’s Foodpanda and Uber’s UberEats.

– Unmesh Phule

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