Zomato's success shows the potential for huge growth of internet companies in India

It is not clear if Zomato will live happily ever after but, right now, this company, which lists restaurants city- and locality wise and counts on restaurant advertisements for its revenues, is in the midst of a fairy tale. In five years’ time, its founders, a couple of young graduates from the Indian Institute of Technology, Delhi, have created a company valued at Rs900 crore. It has produced huge value for the entrepreneurs and the fund that backed them and created 600-odd jobs. It is expanding to other geographies at a breakneck speed. And it has created this value on the basis of a service of rising utility to urbanising, ever more prosperous Indians.

There might be quibbles that the company is overstaffed and overvalued for its current level of revenues, expected to touch Rs36 crore this fiscal year. But let us salute the company for what it has achieved: secured initial funding for a business model that is not unique but depended on good execution for its viability, scaled it up fast, realised the geographic non-specificity of organising the generation and supply of hyper-local information and, based on that realisation, has secured additional funding and expanded to countries like Turkey, the Philippines and Indonesia where it hopes to build on its first-mover advantage.

This creates a consumer internet company from India that forays abroad without depending on the diaspora for its growth. While we wish the company well, what is of interest to other entrepreneurs and investors is the reassurance that the internet economy produces more than bubbles. Just Dial fetched its initial backers a return of 850% through its initial public offer. As India’s broadband access stands poised for take-off, the potential remains huge for many new companies to come up, serve not just Indian consumers and spell prosperity.