Frequent travelers to Asia and Europe are probably aware that Yelp doesn’t have quite the same traction with smartphone users abroad that it does in the US. Many countries in these regions have their own local equivalents with their own loyal user bases. Nevertheless, the network effects at play are similar—the more people who use a particular restaurant review app, the more its attraction to new users, continuing a virtuous cycle. One of the most popular such apps is India-based Zomato, a name few Americans are likely to be familiar with. Thanks to a series of statute acquisitions, Zomato has millions of users in 19 countries. According to TechCrunch, Zomato is further expanding its value proposition to restaurant owners and patrons alike through its acquisition of MaplePOS, a cloud-based payments platform:
“Time to loosen Zomato‘s belt: the Indian startup whose restaurant search app is now used in 22 countries is growing some more. The company has raised $50 million more in funding, and it has made its first acquisition of a product outside of the restaurant search space: it has bought payments platform MaplePOS. The funding values the startup at over $1 billion, a source close to the company tells me.”
Getting into payments seems like a risky move for a restaurant review app but it’s part of a broader strategy by Zomato to become relevant to not just the consumer but the merchant side of the restaurant business as well.
“All of this is part of Zomato’s B2B push, which it calls Zomato for Business, which also includes a new mobile wallet product that it calls Cashless. It’s also preparing to launch online ordering later this month in its home market. The building up of the B2B part of the business, indeed, is part of the logic behind raising more money so soon after the last round. It was only in November 2014 that Zomato raised $60 million at a valuation of $660 million.”
It remains to be seen if there are enough synergies here to justify such a move. Can the same sales team which until now was responsible for selling ad space on the Zomato app to restaurant owners also convince them to allow Zomato to take charge of their acquiring business? Will Zomato be able to offer restaurant owners discounts on interchange if consumers pay with Zomato’s Cashless app? Zomato is making a number of bold bets at the same time. Time will tell if these pan out.
Overview by Nikhil Joseph, Analyst, Emerging technologies Advisory Service at Mercator Advisory Group
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