After launching with big plans, one of India's most hyped startups is pulling out of Ireland

ONE OF INDIA’S most hyped startups has retreated from Ireland – along with several other international markets – as it comes under increasing pressure to become profitable.

New Delhi-based restaurant review, booking and food-ordering firm Zomato is one of the hottest startups to emerge from the world’s second-most populous country.

The company provides detailed restaurant information such as menus, contact details, geocoded maps and user reviews for 300,000 food outlets globally.

Founded in 2008, the firm launched in Ireland in November 2014, making Dublin its European headquarters and claiming coverage of some 3,000 restaurants in the capital.

At the time, the company’s chief executive, Deepinder Goyal, said the app-based service had about 20 staff in Ireland, but it was hoping to expand its local workforce to as many as 70 over the next few years.

Towards the end of 2014, Zomato raised $60 million in a funding round jointly led by heavy-hitting investment firm Vy Capital, which has also backed social media giants Twitter and Facebook.

The firm, which employs about 2,100 people worldwide, has been valued as highly as $1 billion, however analysts at HSBC recently halved their pricetag on the privately held company, claiming it had struggled to secure market penetration and had a flawed business model.

High hopes

Despite high hopes as one of the subcontinent’s few ‘unicorns’, the company recently announced that it is withdrawing its physical presence from about nine countries, including Ireland, in which the food-ordering market is dominated by UK-based Just Eat.

Although its website and app will still be operational here, they will be controlled remotely from the company’s head office in India.

Zomato did not respond to multiple requests for comment from Fora by the time of publication. However a source close to the firm said that the news had come as a shock to Zomato’s Irish workers.

“The scale to grow in Ireland isn’t as big as somewhere like Lisbon,” the source said.

“Dublin has about 3,000 restaurants and Lisbon has about 12,000, even though they are similarly sized cities, so there is a lot more room to grow (there).”

It is understood that several of the Irish staff have been redeployed to other areas in the firm.

Zomato CEO and co-founder Deepinder Goyal

Trouble afoot

Zomato’s financials show losses typical of many startup companies, but the speed at which it has been losing money has easily outpaced its growth in revenue.

Global turnover at the firm nearly doubled to about €25 million, based on current exchange rates, in the 12 months to the end of March 2016.

However pre-tax losses more than tripled to over €65 million for the latest period. The business cut about 10% of its workforce towards the end of 2015, firing around 250 people.

The company is now planning to focus on the 14 countries in which it still has a physical presence.

Update: Zomato has since responded to Fora saying that of the 23 countries that the firm had expanded to, “we narrowed down our focus to 14 core countries”.

A spokeswoman said that any countries besides these core 14 “are being remotely managed out of our HQ, in India”.

“The product is still working, and the product is still growing in terms of content and traffic in these nine markets, including Ireland,” she said.

“The way the traffic is growing in these nine markets…once the traffic there flips over the threshold of monetization, putting a team back into place in these markets is not off the table.”