Foodpanda in talks to buy Holachef

Foodpanda, the online food ordering and delivery marketplace owned by Ola, is in advanced talks to buy Mumbai based food tech startup Holachef Hospitality Pvt. Ltd, which shuttered operations nearly three months ago. Foodpanda will acquire Holachef Staff, brand name and kitchen equipment.

A potential acquisition would be the second within a year for Ola, India’s largest taxi aggregator. Last December, the company, run by ANI Technologies Pvt. Ltd, bought Foodpanda from its German parent. A potential deal signals Ola’s aggressive expansion to compete in the online food ordering and delivery segment alongside players like Swiggy (Bundl Technologies Pvt. Ltd), Zomato (Zomato Media Pvt. Ltd) and the recent entrant UberEats India.

Founded in 2014, Holachef, which delivers home-cooked food to customers, closed operations in April. The startup’s Twitter handle is flooded with customer queries about its sudden absence from delivery platforms. Holachef, which was operational in Mumbai and Pune, had raised ₹ 2 crore from diamond merchant Ashok Kumar in February this year. The company backed by Ratan Tata, Kalaari Capital and venture capital fund India Quotient has raised $9.6 million cumulatively till date.

Ola was also exploring creating an independent food technology company on the lines of Flipkart’s model and was in talks to buy food brand FreshMenu (Foodvista India Pvt. Ltd) along with another private label. Holachef joins the likes of Gurugram-based Twigly that three weeks back shut operations after being in business for three years. Among other food-tech businesses, Spoonjoy (acquired by grocery delivery firm Grofers), TinyOwl, Yumist and Dazo had to shut shop as raising funds amid immense competition became increasingly difficult.

Grofers Acquires Townrush

Hyperlocal delivery startup Grofers has bought business-to-business logistics service provider Townrush, closing its second acquisition within a week. Earlier this week, Gurgaon based Grofers had acquired SpoonJoy. Both acquisitions are essentially acqui-hires where a company is bought for the team instead of its existing business.

Founded in May this year, Townrush had raised an undisclosed amount in a seed round from Lightspeed Venture Partners. Grofers is one of the most well capitalized start-ups in the Hyperlocal delivery segment, having raised $45 Million from Sequoia Capital and Tiger Global Management. Grofers is making these acquisitions primarily for the teams with no significant cash or equity being exchanged.

Townrush closed down in six months. The company used to compete with Roadrunnr, Parcelled, Shadowfax, and Grab, among others. At least 20 such start-ups have emerged in the last 10 months, making it an overcrowded space. However, only Roadrunnr and Shadowfax have raised any significant capital, mopping up $11 Million and $8.5 Million.

Hyperlocal delivery saw a huge amount of ventures spring up this year but many have found it difficult to raise follow on capital. The unit economics in the delivery business is a big challenge. In 2015, as many as 290 startups received seed funding, up almost 90% from last year, but follow on rounds have been muted despite the glut in initial rounds.

Grofers to acquire SpoonJoy

Hyperlocal delivery startup Grofers is in talks to buy Bengaluru based SpoonJoy, as the food ordering app struggles to raise money from new and existing investors. Grofers, run by Locodel Solutions Pvt. Ltd, is expected to sign a acqui-hire deal with SpoonJoy. Operations of SpoonJoy will be shut down once the deal is done.

As investor interest starts to ebb in the crowded food ordering sector, the market is expected to see more such consolidation or strategic investments. Since the start of the year, investors have pumped $150 Million into 20 food ordering startups. The acquisition of SpoonJoy is expected to largely to be a stock deal with some component of cash being involved.

About 40 people from SpoonJoy are expected to join Grofers in the tech and operations departments. SpoonJoy was launched in July 2014 by IIT graduates. The company is backed by Flipkart co-founders Sachin Bansal and Binny Bansal. In May, the company raised $1 Million in a Series A funding from SAIF Partners.

There are early signs of a slowdown and startups in overcrowded sectors will either fail to get higher valuations in their next rounds or not find fresh funds, leading to cost cuts and consolidation over the next one year. However, Food tech companies will not disappear, given the large markets for home deliveries in large cities.