E-pharmacies fetch quick investments, food-tech startups suffer from tightened purses of investors

E-pharmacies fetch quick investments, food-tech startups suffer from tightened purses of investors.

Amidst growing concerns about funds drying up for foodtech companies,Zomato had recently announced that it has reached operational profitability in six markets, including India.

Mumbai / Bengaluru | Feb 24, 2016 01:04 PM IST.

Zomato has been on an overdrive for the past 6-10 months, aggressively cutting down spends and fine-tuning the business model with an eye on profits.

Last week Deepinder led one of Zomato's biggest world-wide marketing drive, #paintitred with 2400 worldwide employees including 1200 in India hitting the streets to paste Zomato stickers on the doors of 82,000 restaurants globally. In recent months Zomato has been rewiring and restructuring the content part of the organisation when food-tech companies are struggling through a fund squeeze while grappling with the high cost of acquiring customers in a fiercely competitive market.

Food-tech startups
Image Credit: YourStory / Linkedin

Foodtech companies are now getting edgy as investors run out of patience to tighten funding for now. Deepinder Goyal, founder and CEO of restaurant search portal Zomato in a candid blog post called 2015, "truly our year of learning." It had to cut 10% of its workforce with other startups such as Dazo and Spoonjoy reportedly shutting operations. Foodpanda and Tinyowl are also reportedly tackling troubled times. In April 2015, the amount of funding was a whopping USD 74 million on a total of seven deals while in August, this dipped to USD 19 million with a total five deals, in September this number further dropped to a total of two deals, ccording to startup specialist Yourstory research estimates.

Internet-first restaurant SpoonJoy has paused operations in Delhi and parts of Bengaluru, which prompted a dig by rival Yumist in a Twitter ad-post that read: "Let us be the spoon to feed you with some real joy." companies mushroomed rapidly in the past year, becoming a much sought-after ecommerce sector while relying heavily on burning through cash to attract customers in a market that quickly got crowded Since last year, 31 food-tech startups have raised seed or angel funding, according to startup data tracker Tracxn, but only five have been able to raise follow-on or series-A funding from institutional investors SpoonJoy, which counts Flipkart Cofounder and CEO Sachin Bansal and SAIF Partners as investors, until recently served 1,500-1,800 orders a day in seven areas in Bengaluru. It has now suspended operations in four areas and merged its seven delivery centres into two.

Whereas, on-demand pharmacy delivery startups are seeing heightened interest from early-stage investors on the back of the vertical's huge potential in India's growing healthcare e-market. After ventures like Netmeds, 1MG (formerly HealthKartPlus) and Phaneesh Murthy-led Zigy, among others, received initial capital, Bangalore-based Myra has raised its series A round from venture fund Matrix Partners, sources close to the matter said.

Entrepreneur angels Pranay Chulet, co-founder of Quikr, and Prashant Malik, co-founder of LimeRoad, are also backing the company, people familiar with the development said on the condition of anonymity.

As many as 60 online pharmacy delivery startups have mushroomed over the past two years in India, according to startup data collector Tracxn, but most of them haven't reached the scale of other online vertical plays like food, furniture and grocery e-commerce. Pharmacy retail is estimated to be a $7-billion market dominated by the brick-and-mortar drug retailers. Online deliveries currently account for a meagre $10 million in size. But with adoption of e-commerce among Indian consumers and rising spends on healthcare, this category is likely to grow. What may be a challenge for many of these companies is to wade through a highly regulated and licensed pharma industry, which many say is ripe for disruption.

In India, medicines can be sold only by a registered pharmacy with a retail licence. Which is why most of these startups are marketplaces or even if they have inventory, final deliveries from the warehouses are made by registered pharmacy stores after procurement of medicines.

E-pharmacy startups bag early investors
Image: ET Bureau
When contacted by TOI, Faizan Aziz, co-founder & CEO of Myra, did not confirm the news of the financing round. However, he said their biggest differentiation came from the use of data science, technology and guaranteed delivery time of 30 minutes or less. "We are able to track inventory with a lot more accuracy. Better tracking leads to improved analysis which enhances our prediction. This means better fill rates, helping us deliver to the customers in a timely manner," Aziz said. Myra Medicines was founded in April last year by Aziz and Anirudh Coontoor. It owns two warehouses in Bengaluru for stocking medicines following the full-stack model.
Atit Jain, CEO and co-founder, Pluss App, an online drugstore which scooped up funds led by IDG Ventures, said medicines as a segment is larger compared to the market for mobile phones. "This is a huge opportunity and this problem cannot be solved by the typical e-commerce companies because there are over a lakh stock-keeping units, along with it being a regulated space," he said. Pluss claims to have registered sixfold growth in number of orders at 1,000 a day, with average ticket size being Rs 400-650 and commission in the 15-20% range.
News Source: ET Bureau / TOI. PTI.

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