Zomato, the global restaurant guide and food on-demand service, has made an acquisition to shore up its delivery business on home turf after it completed a deal for Runnr.
The acquisition has been rumored since May and is much-anticipated, as Zomato CEO Deepinder Goyal himself acknowledged in an announcement. The all-stock deal was previously pegged at $40 million by Indian media, but Zomato didn't give a confirmed price.
Zomato started out as a restaurant guide, but today it offers additional services including point-of-sale services and, in India and the UAE, online ordering and delivery. That puts it in competition with the likes of well-backed Swiggy and Delivery Hero-owned FoodPanda, and that's where Runnr will be put to work. The newly-acquired startup will be run independently by CEO Mohit Kumar which means it will continue to serve other customers and segments beyond Zomato's food orders.
"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 wrote.
Goyal said that Runnr handles 300,000 deliveries per month, which he claimed is just 10 percent of Zomato's own delivery business. The plan is to scale the Runnr business to handle all of Zomato's deliveries in India, and later expand to the UAE.
The Zomato CEO has previously explained that food delivery alone isn't enough to make a business sustainable, so Runnr -- which Zomato plans to scale via investment -- can help out revenue-wise, too.
Runnr is the product of a merger between delivery service Roadrunnr and food delivery company TinyOwl, two startups that raised considerable money from VCs. Roadrunnr took in $28 million in funding, while TinyOwl had raised $27 million. That created a cap table which included some 40 angel investors among other backers, that was one major reason why the deal took time to be finalized, TechCrunch understands.
Zomato was founded in 2008 and it has taken over $240 million from investors during that time, including its most recent injection of $20 million from Sequoia earlier this year. The company was valued above $1 billion in 2015, but it had its valuation sliced in half by HSBC last year following staff layoffs and service cutbacks.
When we asked Zomato its valuation today it declined to comment. Reports from Indian media indicate that the Runnr deal values Zomato at around the $800 million mark.