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Business News/ Industry / Zomato enters US with Urbanspoon acquisition
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Zomato enters US with Urbanspoon acquisition

The acquisition puts Zomato in direct competition with Yelp and other similar restaurant search and review apps

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New Delhi: Zomato Media Pvt. Ltd, which owns the eponymous restaurant search portal and app, said on Monday that it has had acquired Seattle-based bar and restaurant guide Urbanspoon in a move that gives the Gurgaon-based company a toehold in the competitive US market.

The company did not disclose the size of the all-cash deal.

For Zomato, founded in 2008, the US acquisition—estimated at between $50 million and $60 million according to a person with direct knowledge of the matter—marks its most ambitious move.

It puts the company in direct competition with Yelp Inc. and other similar restaurant search and review apps.

Zomato plans to invest $50 million in the US to stay in the game and expects to overtake Yelp within 12 months.

“Usually it takes us 12 months to penetrate a market and be the market leader; however in this case we would like that to happen sooner," said Pankaj Chaddah, co-founder of Zomato.

Zomato, which has thus far raised $113 million, said it will raise more in the next three to six months.

“Our biggest differentiator will be content. We have much better and relevant content and we will continue to follow the model of collecting and publishing the content ourselves rather than crowd-sourcing it," said Chaddah.

Yelp crowd-sources menus, contact details, and pictures.

Urbanspoon, one of the largest restaurant guides in the US, is Zomato’s sixth acquisition in the last six months. In December, Zomato acquired Italy’s Cibando for an undisclosed amount.

The deal also establishes Zomato’s presence in Australia and Canada and enhances its position in the UK and New Zealand, countries where Urbanspoon has a presence.

It helps Zomato expand its presence to 500-plus cities in 22 countries and increases its restaurant coverage from about 300,000 to more than one million.

According to Zomato, its traffic will more than double—from nearly 35 million visits per month to more than 80 million visits per month—as a result of the acquisition, making it the largest restaurant search company in the world.

“Our US entry has been on the cards for a while now, and we’re delighted to be doing so by welcoming Urbanspoon into Zomato. It has a strong presence in the US and the UK, and also dominates restaurant search in Australia and Canada," said Deepinder Goyal, co-founder and chief executive (CEO) of Zomato, in a statement.

The US will not be an easy market to crack, said Sandeep Ladda, technology leader at PricewaterhouseCoopers India. However, given the core advantages and competencies that Zomato has built, the acquisition puts Zomato in a “win-win situation", Ladda said.

An integrated entity (Urbanspoon with Zomato) will be an additional layer of competition for Yelp, he said.

Zomato will soon integrate the two products and Urbanspoon’s traffic will move to Zomato.com. Launched in 2006, Urbanspoon was founded by Adam Doppelt and was sold to Internet conglomerate IAC in 2009. It currently has 50 employees in the US. According to Zomato, the entire Urbanspoon team will join Zomato and the integration will take place over the next three months.

“Zomato has experienced phenomenal growth in recent years, and our customer bases complement each other’s perfectly," Urbanspoon’s CEO Keela Robison said in a statement.

In December, Mint reported that Zomato was looking to expand its international presence by entering 15 more countries including the US in 2015.

Founded in 2008 by Goyal and Chaddah, Zomato has received investor backing from Info Edge (India) Ltd, Vy Capital and Sequoia Capital. Info Edge currently owns over 50% in Zomato.

Zomato is currently valued at $660 million.

Zomato’s larger vision is to be a one-stop shop for everything from restaurant discovery to restaurant payments, Chaddah said in an interview in December. The company will soon be introducing a payment option in the app in some markets, including Dubai. However, it will take some time to implement this in India.

For the year ended 31st March 2014, Zomato posted a loss of 37.2 crore on revenue of 36.11 crore. For the previous year, the company posted a loss of 10 crore on revenue of 12.30 crore.

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Updated: 13 Jan 2015, 12:16 AM IST
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