Zomato, leading online food discovery and food delivery portal, is said to be in talks to acquire Runnr, in order to strengthen its food delivery business. Besides Zomato, UberEATS is also in talks with the company for a potential acquisition.
Interestingly, UberEats is already in the market scouting for acquisition just within a few weeks of its launch in India. As per the report, both Zomato and Uber Eats has submitted term sheet to Runnr, and the offer from cab-hailing service provider — Uber is pegged to be higher.
However, the same report on Economic Times says that in an email response, Uber spokesperson responded with a statement saying: “This is a baseless speculation”. A person aware of this said that the ongoing discussions are being held with a view to acqui-hire the core team at Runnr. He said:
Uber has the technology and nobody can beat it. The discussions are meant for an acqui-hire as it helps to have a ready pool of employees in the food delivery space.
For Zomato, the deal is likely to provide a captive fleet of delivery personnel, a model similar to its rival Swiggy. As per the report from LiveMint, citing two people aware of the matter, Zomato is likely to buy Runnr in an all-stock deal for about $20 million. The final contours of the transaction are yet to be finalized.
Zomato is currently aggregating 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 in September 2015 to strengthen the food delivery business.
In May 2015, the company entered into the food delivery business. It claims to have recorded 2.1 million monthly orders in March this year.
Zomato’s total revenue in 2016-17 rose 80% from a year ago to touch $49 million, mainly due to growth in the food delivery business. Between December 2016 and March 2017, Zomato had reduced its monthly cash burn globally to about $250,000, as against $4.2 million in March 2016.
Runnr was formed in July 2016 with the merger of on-demand customer facing food delivery app Tiny Owl and business-to-business last mile delivery company Roadrunnr. The new merged entity started with delivering food to consumers and B2B food delivery connecting corporate employees and restaurants on a common portal. However, the consumer-facing business has since been suspended.
The entity Runnr had raised 47 crore from existing investors Nexus Venture Partners and Blume Ventures in September to start the altered model of delivery. Co-founders of Tiny Owl had quit the merged entity in October.
The startup, which has significantly reduced cash burn to $300,000-500,000 per month, has less than six months’ cash left. Given the current current market scenario, it may be difficult to raise more funding for the company.