FoodPanda in talks to acquire TinyOwl in an effort to compete with Zomato
INDIA / Red Newswire | Source: Economic Times | Nov 3, 2015, 01:30 PM IST.
The Rocket-Internet backed food ordering platform FoodPanda has been looking forward to strengthen its position in the food-tech market and is now eyeing the Mumbai – based startup TinyOwl. Rumors have it that the German food-tech giant is also looking to invest in Bangalore – based food ordering app Swiggy. According to sources FoodPanda has already started integrating its technology with Swiggy, while the acquisition talks with TinyOwl are still in process.
A source close to the deal said, “FoodPanda is gunning for market share and wants to strengthen its base so as to compete with Zomato globally.” However, Swiggy and TinyOwl have refused to comment on the acquisition. Also, Nandan Reddy, Swiggy co-founder said that the reports about FoodPanda investingin Swiggy are unfounded. He said, “Subsequently, news report of a technology integration between Foodpanda and Swiggy is untrue. No such integration has taken place.”
As per the sources, FoodPanda has also received a fresh fund worth $110 million from its long time investor Rocket Internet. On the other side, TinyOwl has recently raised funds of about $50 million from its existing investors Matrix and Sequoia Capital. The Mumbai – based startup is now connected to 4,000 restaurants and presently operates in six cities across the country.
An investor said, “Food-tech space is already over-crowded with too many players doing the same things. I see only three dominant players (Zomato, FoodPanda and Swiggy) in this segment.”
According to a report from Traxcn, food technology, the food-tech segment is going to witness a huge consolidation and TinyOwl is experiencing problems in obtaining funds. The food ordering market is booming with 120 startups already in the market competing for a market slice worth Rs. 89,500 crore. Out of these 120, around 60 were launched in 2014 itself. Consolidation does look inevitable in this scenario.
FoodPanda acquired TastyKhana in November, 2014 and earlier this year it also acquired JustEat India.
With the funds received, TinyOwl is aiming at controlling the burn rate by restructuring its operations and delivery outsourcing. This investment gives 12 months run time to the company to create a sustainable business. Harshvardhan Mandad, CEO TinyOwl said that the company has started the restructuring process in order to optimize its resources. Mandad said, “In the last few months, we have fully outsourced our last-mile delivery to partners including Roadrunnr, Opin o, Shadowfax. This move helps us focus sharper on our core technology and processes as well as significantly cut costs of delivery. Our costs have come down by 43 per cent with this realignment.”
The company was launched in 2014 with investments from Matrix Partners India, Nexus Ventures Partners and Sequioa Capital. Mandad further added, “Going ahead, we are looking to fully move our order processing to a merchant app and keep our call centre only for escalations and select restaurants.”