Zomato acquires Runnr to bolster food delivery

Acquisition comes at a time when food delivery is becoming a three-horse race between Zomato, Swiggy and UberEATS

Everything about entrepreneurship, the good, bad and the ugly of it, fascinates me. I take a keen interest on startups and venture capital firms and have written extensively on fundraises, M&As and business strategies. I can safely say changing tracks from engineering to journalism has been one of my best decisions. When not working, I indulge in almost every Indian's poison, cricket, playing or watching. I am a foodie and video game buff.

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Image: Amit Verma
 
Food technology startup Zomato has acquired hyperlocal delivery startup Runnr in an attempt to strengthen its delivery business that faces stiff competition from Naspers-backed Swiggy.

Founded in 2015 by former Ola executive Mohit Kumar, along with Arpit Dave, Vatsal Singhal, Aravind Reddy, Gnanesh Chillukuri and Mukunda NS, Runnr essentially handled last mile delivery for businesses. A large part of its clientele comprised restaurants, where Runnr handled home delivery of food. This apart, Runnr serviced businesses across categories such as e-commerce, grocery and pharma, among others.
 
Runnr, once a rising star in the hyperlocal delivery segment, had raised $20-25 million from the likes of Sequoia Capital, Nexus Venture Partners and Blume Ventures. Runnr currently handles close to three lakh monthly orders. Last year, it had acquired food ordering startup Tinyowl in a fire sale to launch a consumer facing business, which was eventually shut down after it failed to take off.
 
In a blog post on Wednesday, Zomato co-founder and chief executive Deepinder Goyal said that Runnr will continue to operate as a separate entity and serve other companies.
 
“Emotionally, the deal has been in place for a couple of months now, and both the teams have been working closely with each other quite some time now. So much so, Mohit Kumar, founder and chief executive at Runnr, has been living in New Delhi (moving from Bengaluru) for about two months already,” Goyal wrote in the blog post.
 
“For us at Zomato, we saw that we were going to be working with a team of extremely driven individuals who had figured out how to solve a vital piece of our puzzle—the one that affects our user delight: logistics. With the combination of Zomato and Runnr, we have everything in the stack of building a delightful food delivery service in India and UAE - end to end - listings, discovery, reviews, ordering, and now, logistics,” he added.
 
Zomato did not disclose the terms of the deal.
 
The acquisition of Runnr comes at a time when Zomato is fast expanding its food delivery business. Having launched food delivery in May 2015, Zomato had invested an undisclosed amount in delivery startup Grab in September 2015. Currently, Zomato services close to three million orders every month.

Chief of staff Surobhi Das had said in a blog post in April that the food delivery business had clocked revenues of $9 million last fiscal, an eight-fold growth from the year-ended March 31, 2016. The advertising revenue grew 58% to $38 million last fiscal.
 
Apart from this, between December last year and March, the company had contained monthly cash burn to about $250,000 as against $4.2 million in March 2016.
 
Swiggy, the best funded homegrown food delivery startup with close to $155 million in its kitty, clocked revenues of about $4 million (approximately Rs 23.59 crore) in FY16 while losses stood at Rs 137.18 crore. Interestingly, Uber has also thrown its hat in the ring with the launch of its food delivery business, UberEATS, earlier this year.
 
Once in vogue, food delivery has been one of the worst hit segments after investors pulled the plug on funding. A large number of food tech start-ups, including funded ones such as Dazo, Eatlo and Spoonjoy, among others shut shop after failing to raise subsequent rounds.

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