What Zomato’s $12 Billion IPO Says About Tech Companies Today
- Date: 06-Aug-2021
- Source: Harvard Business Review
- Sector:Financial Markets
- Country:Middle East
What Zomato’s $12 Billion IPO Says About Tech Companies Today
In mid-July, Zomato, a food delivery company, listed its shares in Indian stock markets. Its initial public offering (IPO) was oversubscribed 35 times, giving it a valuation of $12 billion. Why does a loss-making company — with no real properties or assets — command such high valuation and attract global celebrity investors like Fidelity, Morgan Stanley, Canadian Pension Fund, and the Singapore Government?
Despite operating a traditional food business, Zomato epitomizes a modern tech company. Like DoorDash and SkipTheDishes, it delivers ready-to-eat food to homes without owning farms, food stores, restaurants, warehouses, trucks, or delivery vehicles. Its business model is similar to those of other tech companies like Uber, Amazon, and Airbnb, but differs subtly from the likes of Facebook and LinkedIn.
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