Indian food delivery giant Zomato has reached an agreement to invest $100 million in online grocer Grofers for about 10% stake.

The deal comes at a time when more consumers are buying groceries online, owing to the COVID-19 pandemic.

The new financing will value the startup at a little over $1 billion, putting it in a growing pool of Indian unicorns. (unicorn- a term used to describe privately funded technology startups that have a valuation of a billion dollar and above)

About Company

Grofers

Grofers is the seven-year-old startup, it operates an online grocery delivery service in India.

The startup has witnessed a sharp surge in its popularity in the past year as several Indian states enforced strict lockdown restrictions to contain the spread of the virus.

The startup competes with BigBasket, which recently sold its majority stake to Indian conglomerate Tata Group.

Zomato

Zomato, which acquired Uber’s Indian food delivery business early last year, has told some of its major investors that it envisions a future where the Gurgaon-based firm has expanded much beyond the food delivery category, the source said, requesting anonymity as the talks are private.

About Deal

In the current round, Zomato will invest about $100 million in the SoftBank-backed online grocery firm, while existing investor Tiger Global will put in the rest.

New York-based Tiger is an investor in both companies, while SoftBank Vision Fund owns about 50% of Grofers.

Shareholders of Grofers

Market Share

According to data from PGA Labs, Grofers had a 13% market share in FY21, while market leader BigBasket had 37% and Reliance’s JioMart 4%.

This data showed the Indian e-grocery market is estimated to touch $22 billion by 2025. Industry data estimated the market at about $3 billion last year.

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