QSR chain Wow! Momo raises $23 mn in Series B funding led by Tiger Global

Wow! Momo Foods, which owns and operates two quick-service restaurant brands Wow! Momo and Wow! China, has raised $23 million in Series B funding led by Tiger Global, it said in a statement.

Interestingly, this is one of the first b2c investments by Tiger this year, which has backed a clutch of b2b start-ups after Lee Fixel quit the firm earlier this year.

The restaurant chain is now valued at a massive $120 million (Rs 860 crore), 1.8X more than Rs 300 crore valuation it had achieved when FabIndia MD William Bissel had invested Rs 3 crore in 2018.

“We are excited to partner with Wow! Momo. We believe the Company has a strong leadership team focused on creating value through innovation and creativity. We expect Wow! Momo to continue gaining market share of Indian QSR.” said Scott Shleifer, Partner, Tiger Global.

Large part of the funding in the current round by Tiger Global is primary capital into the business with a $3 million partial secondary exit to the Indian Angel Network with approximately 7x return in 4 years and an estimated IRR of over 70 per cent.

Sagar Daryani, CEO & Co-founder of Wow! China/Wow! Momo, said, “From running a handful of kiosks in Kolkata to becoming a brand operating in over 15 cities, our ‘make-in-India’ journey has come a long way. We are super excited & thankful in welcoming Tiger Global aboard & looking forward to leverage upon their global connects, experience & knowhow. This partnership is indeed a big step forward in our endeavour to become an Indian origin QSR chain with an aim to go global in times to come.”

Incepted in a garage by two students of St Xavier’s College with an initial investment of only Rs 30,000, the Kolkata-based start-up has been dishing out momos and more, for over a decade now. With 282 outlets of Wow! Momo & 11 outlets of its newest brand Wow! China spread across 15 cities combined, the company is now gearing to notch further milestones in its growth trajectory. The start-up had launched its sister brand Wow! China in March 2019. Moving ahead, the company aims to be a platform for QSR play in India and also plans to unveil a range of packaged momo & momo sauce offerings, and will ultimately be working towards an IPO.

Wow! Momo Foods Pvt. Ltd is projected to get to a topline of around Rs 190 crore for FY 2019-20. The company claims a monthly run rate of over Rs 15 crore and opening over 10 new stores every month.

Tiger Global pumps money in Indian startups as investors line up with funds

Tiger Global Management has examined at least a dozen deals with Indian startups in recent months, according to multiple people with knowledge of the talks, illustrating global investors’ fierce interest in the country’s technology ecosystem.

The ultra-secretive New York-based hedge fund has closed investments in at least half of these startups -- nearly all of them in fintech or enterprise software segments. Hedge funds, venture capital firms, and the likes of South Africa-headquartered internet group Naspers Ltd. are also chasing India’s rapidly growing consumer internet and enterprise software firms.

The rising interest in India occurs as investment in China’s recently booming startup sector faces a steep drop-off. It’s a radical progression from just a few years ago when global investors worried about the prospects for India. Fewer smartphones and expensive wireless-data plans restricted internet access to a tiny user pool in a country of 1.3 billion people, pushing investors to chase the handful of entrepreneurs building consumer internet startups. Now cheap Chinese smartphones and inexpensive data rates offered by the aggressive telecom giant Reliance Jio Infocomm Ltd. and its rivals are luring millions of users online every month.

There’s buoyancy also because India’s recent decisive election assured political stability, said venture capitalist Vani Kola, managing director at Kalaari Capital Advisors Pvt, prompting international funds to get back in the investment game. “Investors like Tiger Global are enthused that the market is stable and has reached a certain maturity,” she said. “There’s confidence in the depth of the market.”

This year is already being dubbed Tiger Global India redux by some. The influential investor is renowned for its early bets on high-profile Indian consumer internet startups like Ola, and its triumphant exit last year from most-valuable Indian startup Flipkart, which netted a $3 billion return. In the first half of 2019, Tiger has already funded 13 Indian companies, according to researcher Tracxn Technologies Pvt, compared with 8 investments in 2018 and 6 the year before. The spigot remains open, according to the people, who didn’t want to be named as the deal signings are ongoing.

Tiger’s new focus on enterprise software services coincides with management changes. Lee Fixel, the 39-year-old co-head of private equity for the technology-focused fund, recently departed the firm and Scott Shleifer, a partner, took over the portfolio. Schleifer, 41, best known for turning a $200 million investment in Chinese e-commerce platform JD.com Inc. into a $5 billion return, went on a whirlwind trip to India recently to meet entrepreneurs.

The newest bets by the deep-pocketed hedge fund are mostly in the sub-$50 million range. They include logistics-management startup Locus, agritech provider Ninjacart, expense-management software provider Fyle, and Zenoti. All are spearheaded by Schleifer, the people said.

India’s historical strength in IT services is also spawning thousands of software-as-a-service and business-to-business companies, a natural evolution given the expertise of the labor pool.

“Investors are excited to see India’s transition from an IT services powerhouse to a rising B2B solutions hub,” said Sudheer Koneru, founder and chief executive officer of Zenoti, where Schleifer led a round of funding last month. Services can be virtually served on the cloud to customers anywhere in the world, making it viable to build SaaS startups in low-cost India.

“Not just Tiger -- other global investors too are waking up to the exciting surge of B2B startups coming out of India,” said Koneru.

Koneru’s Zenoti provides business and customer management and software services to beauty and wellness businesses, including spas, salons and gyms. Its 340 workers in the southern city of Hyderabad engineer the product, generate leads, and offer tech support to customers. After initially serving Indian businesses, nearly two thirds of Zenoti’s customers are in the U.S., and it’s doubling revenues year-on-year.

Investments in Indian startups from other global names have also gathered pace in recent months. SoftBank Group Corp. and its Vision Fund, for instance, have invested in logistics provider Delhivery, and in Ola earlier this year, converting both into unicorns. India’s leading fintech startups are also in fund-raising mode.

“Investors are finally seeing numbers, and the market is looking very very viable,” said Neha Singh, co-founder of researcher Tracxn.