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At least two more high-level resignations were expected at the country’s oldest food technology firm Zomato, which saw the exit of one of its founders Pankaj Chaddah on Thursday, sources said.
According to sources in the company, new investors Ant Financial and older ones, including Sequoia Capital and Temasek Holdings, wanted a rejig in the top management to boost some of its verticals, including the delivery business, which is crucial for Zomato’s growth.
After months of talks, Zomato in February managed to secure $200 million from Ant Financial, raising the valuation of the company to $1 billion. Alibaba, which has made massive investments in the Vijay Shekhar Sharma-led Paytm and e-grocery major Big Basket, plans to create a whole ecosystem of services hinging on financial services provided by Paytm.
“With Swiggy leading the food delivery business with Foodpanda close on heels, thanks to new backers Ola catching up and players such as Ubereats gaining ground, Zomato needs to quickly be on the top of its game. The company is still earning the majority of its revenue from its listing business, which is good, but delivery is where the real money is. The investors want a reboot of sorts, which has now led to the exit of a co-founder,” said a senior executive in the company.
This is the reason, Mohit Kumar, co-founder of hyper local delivery firm Runnr, which Zomato acquired last year for close to $20 million, will be looking after the food ordering business and renew its efforts to take on Swiggy.
Sources added that the next exits would be in the technology team of Zomato’s senior management where the investors want a complete overhaul in operations so that the delivery arm can be ship-shape. At least two more senior management exits are likely to happen by April this year.
While Zomato has been able to get a heavy hitter such as Alibaba’s financial and investment firm Ant Financial on board, sources said the investors wanted the company to rethink some of its initiatives such as Zomato Gold, a membership-based service.
“Zomato Gold was supposed to be this exclusive membership based service that would ensure customer stickiness to the platform. However, this has not shown the desired results and a lot of restaurants have pulled out of this. Investors want this service to be gradually pulled out,” added the source.
The company, however, said Chaddah’s exit and the rejig at the firm were separate developments and not related. “Pankaj Chaddah’s exit and the reshuffle are two different things. The investors have nothing to do with either of them. They believe in the team and let Deepinder Goyal and everyone else decide what is best for the company. Pankaj decided to leave a few months ago and now it is a good time for him to do that,” the company said in a question sent to it. Chaddah, who was running Zomato along with Goyal for a decade, exited from the firm and announced his decision to quit on micro-blogging site Twitter on Thursday. His exit came just hours after Ant Financial put $150 million into the company.
The remaining $50 million in shares Ant Financial has secured via secondary sales. Existing investor Info Edge’s board had earlier approved a proposal for divestment of 32,629 equity shares of Zomato to Ant.
“After 10 years, I am moving on from Zomato to try out something new. I will continue to play an active role till the end of this month. Have been thinking about this for a while, and the timing seems right today as Zomato is back to being a rocket-ship,”Chaddah said in a tweet.
— Investors Ant Financial, Sequoia Capital and Temasek Holdings want a complete overhaul in operations so that the company's delivery arm can be ship-shape
— Next exits will be in the technology team of senior management
— At least two more senior management exits are likely to take place by April
— The company says Pankaj Chaddah’s exit and the rejig at the firm are separate developments and not related