Zomato’s recent decision to secure additional funding via a qualified institutional placement (QIP), despite holding $1.5 billion in cash reserves, has stirred excitement within the quick commerce industry. Many view this move as a strategic attempt to divert attention from Swiggy’s upcoming $1.25 billion IPO, expected in mid-November. The quick commerce space, known for its high operational costs, now seems to be following the same path that e-commerce did a decade ago, requiring large capital infusions to sustain growth.
Although Zomato already sits on a substantial cash pile of around Rs 12,600 crore, the decision to raise more funds through a QIP has left market observers questioning the company’s motives. Some believe this could be a tactic to overshadow Swiggy’s IPO, while others fear it may trigger a surge in cash burn across the sector. This comes as Zepto, another key player in quick commerce, seeks to raise fresh capital despite having secured $1 billion in the last four months.
The increasing demand for capital in this space mirrors the early days of e-commerce, as companies like Zomato’s Blinkit, Swiggy’s Instamart, and Zepto expand into diverse categories like fashion and electronics. One investor tracking consumer internet companies suggested that Zomato’s potential QIP may signal an impending price war, heightening competition and impacting everyone involved in the quick commerce sector.