Quick service restaurant (QSR) chain Wow! Momo has raised $23 million from New York-based hedge fund Tiger Global Management. With this Series B funding, the Kolkata-based startup's valuation has shot up over 186 per cent to $120 million (INR 860 crore) in just 15 months. It was valued at Rs 300 crore last June, when Fabindia Managing Director William Bissel ploughed in Rs 3 crore.
Incepted in a garage by two students of St Xavier's College with an initial investment of only INR 30,000, the start-up currently owns over 282 operational outlets of Wow! Momo and 11 outlets of Wow! China, a second brand launched earlier this year. "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," Sagar Daryani, CEO and co-founder of the chain, said in a statement, adding that the partnership with Tiger Global is a big step forward in their endeavour "to go global in times to come".
The funding round also saw a partial secondary exit for the Indian Angel Network (IAN). The company's first investor has raked in $3 million, an impressive seven-fold return on investment in four years. The internal rate of return (IRR) is estimated to be around 70 per cent, the statement added. In 2015, Wow! Momo had raised Rs 10 crore from IAN, led by Sanjeev Bikhchandani, Saurabh Srivastava and Ashvin Chadha. After 18 months of the investment, the investors took a partial exit at an IRR of 50 per cent in the subsequent funding round in 2017. That's when Lighthouse Funds invested Rs 44 crore in the company at a valuation of Rs 230 crore.
"Personally, I am now very bullish on Wow! China as well & feel that it will only add onto the companies profitability with ability to scale & grow faster," said Bikhchandani, commending the team for being able to successfully create a new dominant category in the QSR space.
Wow! Momo Foods Pvt. Ltd intends to deploy the fresh capital infusion from Tiger Global to further scale up operations backed with disruptive research and development to reach out to a larger consumer base within the country. "Moving ahead, the company aims to be a platform for QSR play in India and also plans to unveil a range of packaged momo and momo sauce offerings," said the company, adding that it will continue to work towards its planned IPO.
Moreover, it is looking to build a Hybrid Operating model of a mix of physical stores in prominent retail locations as well as Cloud kitchens to cater to its extensively growing Delivery business. "The business intends to expand and grow its profitability to over 1,000 stores, reaching an annualised turnover of over Rs 1,000 crore in the next 4 to 5 years," it added.
The company has been EBITDA positive since inception and has been growing at a CAGR of over 50 per cent for the last three years and reached a double digit EBITDA for the first time in the first quarter of the current fiscal. It is currently clocking a monthly run rate of over Rs 15 crore per month and is projected to get to a topline of around Rs 190 crore for FY20. It aims to open over 120 stores by end March, at its current pace of 10 new outlets every month.