Restaurant discovery service Zomato buys Urbanspoon

The deal will allow Zomato to expand to the United States, Canada and Australia for the first time

Financial trends and news by Steven Loeb
January 12, 2015
Short URL: http://vator.tv/n/3b56

Given how long everyone has been touting India's might as a tech ecosystem, is anyone really surprised by the number of big, global companies that have been coming out of there recently? 2014 in particular was a huge year for the country, and 2015 is shaping up to be a big year as well.

Indian restaurant discovery service Zomato has acquired restaurant information and recommendation service Urbanspoon from IAC, in an all-cash deal, it was announced on Monday. No financial terms of the deal were disclosed, but according to a source with ties to the companies, it was "the largest deal of its kind involving a U.S. consumer brand acquisition by an Indian startup."

Zomato allows users to find the restaurants nearby, giving users access to recommendations and reviews. The acquisition of Urbanspoon is just the latest purchase the company has made in the last six months, having already acquired six local restaurant search players in New Zealand, Poland, Czech Republic, Slovakia, Italy and Turkey.

By buying Urbanspoon, Zomato will be able to enter the markets in United States, Australia and Canada for the first time, giving it a presence in 22 different countries. The deal will also double the company's Web traffic, giving it 80 million visits every month, up from the 35 million it has currently. And the deal will also triple the number of restaurants on the platform from 300,000 to over one million. 

"Urbanspoon has been a dominant player in the US, Canada and Australia for years now, and it’s a great business that’s been built on a solid foundation of exhaustive, rich local restaurant content. Everything they’ve done has been powered by a fantastic team that shares our vision and core values, and brings a wealth of local knowledge and expertise to the table," Zomato CEO Deepinder Goyal wrote in a blog post

Going forward, Urbanspoon will not retain its own brand. All Urbanspoon traffic will move to Zomato.com, and all Urbanspoon app users will be able to use the Zomato app. In short, the Urbanspoon brand will be gradually integrated into Zomato.

"Over the coming months, the Zomato and Urbanspoon teams will be working closely to integrate Urbanspoon’s listings, ratings, user accounts and more into the Zomato system," Urbanspoon wrote in its own blog post.

"We think this transition will be hugely beneficial to our current users as they will get to enjoy the beautiful design and usability of the Zomato website and mobile apps combined with the features they know, love, and expect from Urbanspoon."

Founded in 2008, Zomato has raised over $113 million to date, most recently a $60 million round in November. Investors in the company include Sequoia Capital, Vy Capital, and Info Edge.

Indian companies

There was a flurry of activity in India this 2014.

It was the year that India became Uber's biggest non-U.S. market (though that status has now been threatened after an incident in New Delhi where a passenger was allegedly raped by a driver, causing the service to be banned in that city, as well as Hyderabad). It was also the year that Facebook hit the 100 million user mark in the country, giving it the second largest base of Facebook users in the world.

2014 ended with News Corp. purchasing financial planning service BigDecisions.com and its parent company, FinDirect Services Pvt Ltd. The acquisition followed News Corp's first investment in India as well; in August it participated in a $37 million round for PropTiger, an online real estate marketing platform in India. In all, News Corp. acquired a 25% stake in the company.

But mostly 2014 was all about India e-commerce, with huge investments and funding in that space.

Two companies in particular raised funding in the billions of dollars:  Flipkart, which is also the largest e-commerce company in India, raised nearly $2 billion in three rounds. First it picked up a $210 million investment led by DST Global in May and than a whopping $1 billion round, led by Tiger Global and Naspers, in July. In December week it raised another $700 million.

Meanwhile, Snapdeal, which is one of Flipkart's biggest rivals, raised at least $860 million in four rounds in 2014. 

The first investment in the company was in a round led by eBay in February, in which it invested $133.7 million. The round also included Kalaari Capital, Nexus Venture Partners, Bessemer Venture Partners, Intel Capital and Saama Capital. That was then followed by another $100 million from Temasek, BlackRock, Myriad, Premji Invest and Tybourne in May, and then an undisclosed personal investmentfrom Ratan Tata in August. The company then added another $627 million from Softbank in October.

Both of those companies will have to deal with Amazon, which announced in July that it was going to be investing $2 billion in its Indian operations. 

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