Food-technology start-up Zomato Media Pvt Ltd has acquired delivery start-up Runnr as part of a widely expected, all-stock deal that would help the former significantly shore up its food delivery business, amid intense competition from rapidly-growing rivals such as Swiggy.
The deal, which was announced by Zomato founder and chief executive Deepinder Goyal in a blog post on Wednesday, is expected to bolster Zomato’s delivery capabilities and help the New Delhi-based start-up build a captive fleet of delivery personnel — a model very similar to Swiggy’s (Bundl Technologies Pvt. Ltd).
Zomato did not disclose the deal value, but Mint had reported on May 15 that the all-stock deal could be pegged at about $20 million.
“We’ve been adding to our Runnr team steadily over the past week; it is already 1,500 strong, and growing by the day…Yes, that’s right, we just signed our long-rumoured acquisition of Runnr,” Goyal said in the blog post.
“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, the founder and CEO of Runnr, has been living in Delhi (moving from Bangalore) for about two months already,” he added.
Goyal said that the talks to acquire Runnr had started in May. Mint had first reported on 15 May that Zomato was in advanced talks to acquire Runnr (Carthero Technologies Pvt. Ltd) in a move that would help Zomato strengthen its food delivery business, citing two people aware of the development.
The deal also hands out a lifeline to Runnr which has struggled to raise funds in the recent past. It has raised about $20-25 million since it started out in 2015 from investors such as Nexus Venture Partners, Blume Ventures and Sequoia Capital. Runnr was a product of a merger between hyperlocal delivery start-up Roadrunnr and food-ordering start-up TinyOwl.
Goyal said Runnr was already fulfilling about 300,000 orders a month. He added that Runnr founder Mohit Kumar will remain chief executive and will continue to work on the strategic vision for the start-up with the rest of his team. He said the acquired firm will continue to be run independently by Kumar.
“For the record, we have always maintained that the most cost-efficient delivery fleet is the restaurant’s own, where they can utilise the same staff during off-peak hours for back-of-house and marketing activities. That belief is still intact. Keeping that in mind, Runnr will continue to function as an independent logistics company (owned by Zomato) offering the full stack of logistical services to players other than Zomato as well – e.g. pharma, grocery, e-commerce, etc. This will ensure that the delivery fleet capacity that we build operates on a positive unit economics level while serving the mega-peaks in the food delivery business,” Goyal said.
Prior to its buyout of Runnr, Zomato used to aggregate restaurants on its platform and works with third-party delivery partners such as Runnr and Grab to execute deliveries.
In September 2015, Zomato had picked up a minority stake in Grab (Grab a Grub Services Pvt. Ltd) to bolster its food delivery business.
“On my part, whenever I see a delivery boy on the road, I slow down (or stop) to respect the right of way. After all, every meal matters,” said Goyal.