ZOMATO AND EASY EAT AI SPARK ENTHUSIASM AMONG INVESTORS

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Digitisation in Asia’s food sector is continuing apace with a recent initial public offering and a round of funding indicating that investors have a big appetite for high-tech companies in the sector.

As has been widely reported, there was brisk demand from investors when Zomato, the Indian-based food delivery app, held its $1.3 billion (€1.1 billion) IPO in July.

The part of Zomato’s IPO that was reserved for institutional investors was oversubscribed a reported 52 times, helping the listing to be oversubscribed 38 times overall – with bids totalling $46.3 billion (€39.2 million).

Zomato, which was founded in 2008, remains loss-making, and reports have noted that the company highlighted in its IPO prospectus that costs and losses were both likely to continue to climb.

Some analysts have been quoted as saying that it remains unclear how the company will eventually become profitable, and the value placed on it by the IPO is high relative to earnings.

Comparisons with the value of similar companies listed in other countries also seem to indicate that Zomato may be overvalued, according to some observers.

The heavy interest in Zomato follows a pattern seen with a number of other major IPOs in India since last year, most notably that of Mrs Bectors Food, which was almost 200 times oversubscribed.

There are fears, though, that with the stock market at a high in India, but with the country’s economic indicators mixed, shares could be set for a correction.

Zomato brands itself as offering meals from more than a million restaurants in countries including India, Canada, the United Kingdom, the United States, Australia, Qatar and the United Arab Emirates.

The app’s services are available in more than 500 cities and there are nearly 7 million customers using Zomato each month, according to reports.

Easy Eat AI attracts interest

Meanwhile, a Singaporean-based food industry tech company at a much earlier stage of development has been attracting brisk interest from investors.

Easy Eat AI, which was founded in 2019, raised $5 million (€4.24 million) in its latest funding round as it looks to expand into other South-east Asian countries.

Currently active in Malaysia, the company offers a technology platform allowing restaurants to digitise their operations, including customer orders and delivery, and inventory.

The ordering system that Easy Eat AI offers to restaurants is based on QR codes.

A key benefit to businesses that sign up with the two-year-old firm is said to be the ability to gain AI-related data about customers.

The company, which was set up by Rhythm Gupta, Abdul Khalid and Mohd Wassem, also claims to both increase customers’ revenue and cut their costs.

In widely reported comments, Wassem, the company’s CEO, said the pandemic had “accelerated the digital transformation of the restaurant industry”.

“Easy Eat AI partner restaurants have been able to withstand the impact of Covid-19 better than other restaurants”, he said.

“Even during the worst of the lockdown period, our merchants were generating 50% of the usual revenue.”

Easy Eat AI allows businesses to link to other food delivery apps, but also has its own delivery service, which is claimed to cost much less than the industry average.

Discussing the funding in a statement reported by media, Keshav Reddy, the managing partner of one of the investors, Reddy Futures family office, described the team at Easy Eat AI as being “customer obsessed”.

“Their innovative software platform will be disruptive to the entire food and beverage ecosystem and how customers engage through the entire food and beverage lifecycle in the online-to-offline world,” he said.

Others involved in the funding round included “a few Silicon Valley-based venture capital firms and angel investors”, according to reports, along with Ritesh Agarwal’s family office.

The enthusiasm of investors in Easy Eat AI mirrors heavy interest in Kune, a food delivery app being launched in Kenya.

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