How Zomato’s CEO explains the overlap between his personal and professional investments

Back to investment basics.
Back to investment basics.
Image: Reuters/Rupak De Chowdhuri
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Deepinder Goyal is an investor in a dozen companies. But two particular investments—$100,000 in logistics startup Shiprocket and $94,000 in grocery delivery service Grofers (now Blinkit)—have sent alarm bells ringing.

After Goyal backed these businesses, Zomato—the company he founded and heads—also pumped into money in them.

Of the seven investments Zomato made in the year ending March 2022, two were Shiprocket and Blinkit, raising concerns that Goyal used his firm to boost his personal holdings in those businesses.

Goyal, however, says that’s not the case. In a shareholder letter from May 24, he wrote there’s nothing odd about using his personal money to back startups and then recommending them to Zomato’s board if he finds them to be a good fit. In fact, what he learns from his private investments, he said, makes him a more insightful CEO at Zomato.

Rather than “using Zomato’s balance sheet to enhance the value of private investments…I am using my personal money to increase the value of our shares at Zomato,” he wrote.

For now, it doesn’t look like Goyal’s investments in the two companies paid off for him personally. He exited Shiprocket at zero returns, and whatever money he made from his Grofers stake was before Zomato entered the fray.

The investor CEO

The scrutiny Goyal is facing is reminiscent of criticism against WeWork’s former CEO Adam Neumann, who personally invested in eccentric startups from artificial wave pools to superfood coffee drinks, and then directed the company to back them. Of course, Neumann’s investments were far more unconventional than Goyal’s. And there were times Neumann undeniably flouted the rules—like when he held stakes in the very buildings WeWork leased office space.

Instead, Goyal’s approach with the startups he brings to Zomato’s table seems to mirror that of China-based internet firms such as Meituan, Alibaba, and Tencent. The idea is to acquire minority stakes across various sectors to improve customer retention and grow transaction revenue for the industry, and thereby the core business.

“I get to know some founders really well, connect more dots, and sometimes find cultural and strategic synergies with other companies,” Goyal said in his shareholder letter. “Overall, I don’t want to use Zomato capital to build high risk hit-or-miss relationships with other founders. I would rather use my personal money to build those relationships.” 

To reduce bias, Goyal said he recuses himself from the conversation when presenting a company from his personal portfolio to the Zomato board for evaluation, he says. And his personal investment has little bearing on the final say, Akshant Goyal (no relation), the company’s chief financial officer, added in the letter. “We stay committed to not letting this be a factor in any of our investments, and run a tight governance process with the support of our strong and independent board,” he wrote.

The vehement defense comes as the company, which went public less than a year ago, is being held accountable in the public purview. At least for now, Zomato said it has no plans to make more minority investments in the near future.