Rocket Internet-backed Foodpanda is close to picking up a stake in Mumbai-based food ordering app TinyOwl...
Rocket Internet-backed Foodpanda is close to picking up a stake in Mumbai-based food ordering app TinyOwl, three people familiar with the development told TOI, in what may turn out to be an early move towards consolidation in the red-hot food delivery space. The deal, when it goes through, will be a financial one and not strategic in nature, sources said.
Foodpanda's investment in TinyOwl, founded by five IIT-Bombay grads in 2014, is part of a $40-million, or Rs 250-crore, financing round (series C) which will see existing investors Sequoia Capital, Matrix Partners and Nexus Venture Partners also participate, sources cited earlier told TOI on the condition of anonymity .
When contacted by TOI, Harshvardhan Mandad, co-founder & CEO at TinyOwl, said he had no comments to offer. A detailed mail sent out to the press team at Rocket Internet remained unanswered till the time of going to press.
TinyOwl, one of the fastest growing food ordering startups, has had a quick ramp-up after having started off in Mumbai in April 2014. It has so far scooped up $20 million in funds across two rounds. Present across six cities now, the location-based food ordering app is targeting to expand into 50 cities by the end of this year.
The Indian food ordering and delivery market driven by app-based players became the hottest category to attract VC money in the past year. However, with growing cash burns due to high user acquisition costs and operational bottlenecks, it's seen some cooling off in the past few months. Tracxn, which collects data on startups, said that so far this year $91 million has been raised by food delivery companies, all in early stages.
Foodpanda, which operates across 40 countries and has been consolidating its position in India with acquisitions like Just Eat and TastyKhan, recently rejigged its top management with its MD Rohit Chadda stepping down. Its potential stake purchase in TinyOwl comes after it held talks with other startups in the food ordering and delivering space, sources said. Foodpanda is part of Global Online Takeaway Delivery group created earlier this year by Rocket Internet, a Berlin-based incubator of internet companies. With investors like Goldman Sachs on board, Foodpanda has raised more than $300 million since it began operations in 2012, with Rocket owning a majority in the company at 52%. The Samwer brothers - Marc, Oliver and Alexander - who founded Rocket Internet in 2007, entered India in 2011-12 with the launch of fashion and lifestyle portal Jabong and Fabfurnish, the furniture e-tailer, both of which have seen management changes recently.
Since Rocket went public about a year ago, the scrutiny of its portfolio companies has gone up significantly, said a person close the German incubator, known for replicating successful US internet models globally.
TinyOwl competes with Foodpanda and others like the recently launched Zomato delivery, Bengaluru-based Swiggy, among others. Besides the food delivery startups, there are multiple players in the online-restaurant and chef marketplace model, making food one of the most attractive and scalable verticals for risk investors to chase.
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