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Food-based start-ups see downfall in competition


Many such firms have seen their capital dry-up or aren’t generating enough revenue.

Bengaluru: As entrepreneurs around the world founded technology start-ups in the past few years to deliver food to diners’ doors, perhaps no market grew quite as riotously as India. Customers could order food from different start-ups, none of which required a minimum order. Discounts were plentiful and delivery was free.

Now the buffet is over. Venture capital is drying up and start-ups are disappearing. TinyOwl, a pioneering Mumbai-based food-delivery app that raised million from investors, including Sequoia Capital, has run through most of its money and will merge with a smaller delivery firm, Runnr.

Gone are the endless discounts and giddy marketing budgets. The new normal is perhaps instituted through surge-pricing, i.e.. Increase in delivery fees in some cities on rainy days and festival days.

Food tech companies around the world are besieged as well. In Europe, venture funding for food delivery start-ups fell more than 90% in the first quarter In the US, once-celebrated companies are closing.

Not so long ago, India seemed the model market for food technology. Of late, it has begun to exemplify the excess of the movement It is a clear case of too many cooks in an overcrowded kitchen. The competition from “two or more players going after the same set of customers and offering discounts” hurts profits.

Many well-funded start-ups started off quite nicely, but failed to take it to the next level.” Ajay Kakra, director. food & agriculture, PricewaterhouseCoopers India

There were 80 start-ups a year ago, all ‘Hum bhi kar sakte hain’- (We can do it too) players, who raised funds and started discounting in order to overtake the rest. Now there are hardly 10 left standing.” Harshvardhan Mandad, 26, co-founder. TinyOwl


  • Venture investors poured $229 million into 431 food-tech start-ups in the country last year.
  • This was four times the amount of money and number of businesses as in 2013 says research firm Tracxn.
  • 70 start-ups sprouted in the last few years just to deliver groceries.
  • In the food-ordering sector, entrepreneurs spent millions of dollars trying to assemble massive menus from hundreds of restaurants.
  • PepperTap, a grocery service backed by Sequoia and Snapdeal, shut down in April.
  • Zomato saw its billion-dollar valuation slashed in half this month by analysts at HSBC Securities and Capital Markets (India).
Source: DNA
(Photo:  yourstory)

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