IPO-bound food delivery giant Zomato has signed a deal to invest $120 Million in online grocery startup Grofers. As part of the deal, Zomato has valued Grofers at $1 Billion, gifting the unicorn status. The deal comes at a time online grocery industry is rising in India, owing to the COVID-19 pandemic.
Talking to the media, a Grofers spokesperson said, “We don’t comment on speculation. Our focus at present is to do our best to serve consumers at this time of the country’s need; while we continue to build technology that empowers the grocery ecosystem to make products more affordable and accessible for millions of Indian households.”
Grofers CEO Albinder Dhindsa had said in a June 21 blog post that ‘next round of funding is secure’ while announcing that the company would give 33 per cent hikes to its tech teams.
“After coming out of the second wave, and at a point where our next funding round is secure, I think it is time to kickstart a lot of initiatives that I have been waiting for the right time to begin,” Dhindsa wrote in the post.
“The entire tech team gets a no-ifs-and-buts 33 per cent increase in salary starting July (i.e. if your annual salary was Rs 30 lakhs, it will now be Rs 40 lakhs). Depending on how much impact each of you has created over the last year, there will also be a hefty ESOP allocation coming your way which will be communicated to you in the next few weeks,’ he added.
Tiger Global is a common investor in Zomato and Grofers, and as of July 2020, held a nearly 20 per cent stake in Grofers, as per data from Tracxn. Softbank, which is a large shareholder in Grofers, is not expected to participate in this funding round. However, Tiger Global is expected to be mediating the deal on mutual terms surrounding the recent developments in Grofers and Online Grocery Industry.
Grofers co-founder Saurabh Kumar announced on June 18, 2021, that he will be leaving the startup, eight years after building it with founder and CEO Albinder Dhindsa. Though he is giving up his operational roles in the company, he will remain a shareholder on the board.
Alongside, Grofers’ direct and largest competitor BigBasket recently got acquired by the prestigious Tata Group, which has infused over $1 billion into the company to strengthen its Digital aspirations, which further eyed 1MG and Cure.fit.
This is not the first time Zomato and Grofers have tried to forge a deal. Last year, they were in talks for an acquisition deal that fell apart. For Zomato, adding e-grocery to its cart would be crucial as rival Swiggy is aggressively looking at the segment for expansion and as giants like Amazon are forging investments in.