Restaurant-listings firm Zomato is close to acquiring Bangalore-based last-mile delivery startup Runnr in an all-stock deal as it looks to strengthen its fast-growing food-ordering business, a media report said citing people familiar with the development.
The deal values Zomato at $800 million and pegs Runnr’s enterprise value at $40 million, a report in The Times of India said.
Runnr’s $40-million valuation comprises $25 million from the investor pool and $15 million from a common pool, which includes stakes owned by founders and employees, the TOI report added.
Email queries sent by VCCircle to Zomato and Runnr remained unanswered at the time of writing this report. The copy will be updated as and when the responses are received.
Zomato Media Pvt. Ltd has managed to reduce its cash burn substantially, and grew its revenue rapidly in the year through March, as the restaurant listings and food delivery firm eyes profitability. Its revenue from the food ordering business jumped eight-fold to almost $9 million in the last financial year, which could have accelerated its race to acquire Runnr.
The battle for market share is heating up in the food delivery space like never before with all key players raising significant venture capital investments to up the game. Foodpanda’s parent Delivery Hero raised around $431.45 million (around Rs 3,000 crore) from South African internet investor Naspers, of which a large portion is earmarked for the Indian market. Swiggy, the other prominent food delivery player, also secured about $80 million (around Rs 517 crore) in its Series E round from Naspers. With Runnr under its sleeve, Zomato is expected to go all-out to capture a fair share of the food delivery market.
Runnr was formed after on-demand logistics startup Roadrunnr acquired troubled food-ordering startup TinyOwl in a share-swap transaction in June 2016, a deal orchestrated by the common investors of the two startups. Roadrunnr then pivoted to food delivery, focusing largely on the consumer side.
Founded in 2015 by former Flipkart employees Mohit Kumar and Arpit Dave, Roadrunnr started off as a provider of hyperlocal logistics services to merchants, restaurants and e-commerce companies, enabling them to deliver orders by connecting with a local delivery fleet. In July 2015, it raised $11 million in Series A funding from Sequoia Capital, Nexus Venture Partners, Blume Ventures and others.
Following the acquisition, Runnr, owned and operated by Carthero Technologies Pvt. Ltd., secured $7 million from existing investors. Sequoia Capital did not take part in this round.
However, in April this year, the company trimmed its business-to-consumer (B2C) operations (food delivery) in a number of locations across Bangalore and Mumbai to focus more on its business-to-business (B2B) services. Following the scale-back, its food delivery services will be reduced to a total of 40 localities in these two cities, Mohit Kumar, co-founder and CEO of Runnr, had told VCCircle.