It looks like consolidation is taking over the food tech space as well. India’s go-to restaurant discovery startup Zomato is in advanced talks to acquire delivery startup Runnr. As per a report in Mint, this move will help Zomato further strengthen its food delivery business.
If the deal goes through, it is likely to give Zomato a fleet of delivery personnel to take on its biggest rival in the food delivery space, Swiggy. As per the Mint report, Zomato might be buying Runnr, run by Carthero Technologies, in an all-stock deal for about $20 million. The final contours of the deal are yet to be finalized.
Food delivery currently contributes only about 20% to Zomato’s revenues. It claims to have served 2.1 million orders in the month of March. However, it currently uses third party delivery partners like Runnr to do delivery.
Zomato currently aggregates restaurants on its platform and works with third-party delivery partners such as Runnr and Grab to fulfil deliveries. The company had invested an undisclosed amount for a minority stake in Grab (run by Grab a Grub Services) in September 2015 to strengthen the food delivery business.
Zomato recently announced that its delivery revenue grew eightfold to nine million dollars in FY17.
On the other hand, while Swiggy's FY17 numbers are unavailable, it earned a revenue of about four million dollars in FY16, but its losses grew nearly 65-fold.
Zomato’s total revenue in 2016-17 rose 80% from a year ago to touch $49 million due to the growth in advertisements and the food delivery business, as per the Mint report.
Runnr, earlier called Road Runnr, acquired beleaguered TinyOwl that had shut down operations in all cities but Mumbai in June 2016 to for Runnr. While it first started off as a B2C food delivery platform, it changed tracks eventually.
The company raised only about $25 million since inception.
Sources told Mint that Runnr significantly reduced its cash burn to $300,000-500,000 per month. “But they have less than six months’ cash left. The current market scenario is grim and it may be difficult to raise more,” the source said.