Tinyowl, Roadrunnr to merge to take on Swiggy, Zomato

Mumbai: Food ordering firm TinyOwl Technology Pvt. Ltd and logistics firm Carthero Technologies Pvt. Ltd (Roadrunnr) will start operating as a combined company called Runnr by the end of May, according to three people directly involved with the deal.

The two companies have common investors in Sequoia Capital and Nexus Venture Partners, both of which helped push through the deal.

Mint couldn’t ascertain the value of the proposed deal.

Founders of Mumbai-based Tinyowl didn’t respond to phonecalls and the spokesperson of Bengaluru-based Roadrunnr declined to comment.

An investor in Tinyowl said the merger will strengthen the front and back end for the combined entity, Runnr, to compete with other firms like Swiggy and Zomato Order.

“Tinyowl has a very strong front end, user base and Roadrunnr has its back end technology in a good position. This deal will help Roadrunnr get access to users; it will start with the food segment and will later move to other segments of delivery,” the investor added.

“The deal is done and the integration will happen over the next few weeks. There is no clarity on the terms of the deal or how many people from TinyOwl will join Roadrunnr,” said the second person over the phone.

Tinyowl has been trying to get its business model right after investors began questioning on unit economics and growth in transactions in the food tech space.

Tinyowl, after raising ₹ 50 crore last October from Nexus Venture Partners and Matrix partners, was asked to focus on growing transactions and cutting costs.

As part of the cost-cutting plan, Tinyowl had to lay off around 100 employees in November.

“Till March end, the target is to reach 10,000 transactions a day from the current level of 3,000. If we won’t do that, then other options (including home-cooked food) of growth would have to be explored,” a top Tinyowl executive said in February when the company was making an average of ₹ 30 per order and was burning ₹ 1.9 crore a month. In addition to this, in January, it hired a new chief technology officer and chief finance officer to remodel its operations.

The food delivery and takeaway market in India was pegged at $12.8 billion in 2014, however the actual penetration level has been only 0.7 % according to an Internet Indian report by Kotak Institutional Equities research.

The report also states that around 27% of the 40 million online shoppers order food online and the takeaway market is four times the delivery market