Some of the biggest mergers of Indian startups ever include that between Snapdeal and Freecharge, Flipkart and Myntra, Ola and TaxiForSure, PayU and CitrusPay, Myntra and Jabong, MakeMyTrip and Ibibo, and Zomato and Urbanspoon. A rumour of another bashing merger is circling the corridors of India’s dynamic startup industry. This time the food ordering and delivery platform is likely to be merged with arch-rival Zomato, thereby diminishing the possibilities of fierce competition in the food game.
However, the business alignments and differences in valuations have restricted the finalization of talks. Sources have reported that Gurgaon-based Zomato is pushing for a stock-based merger, while the Bengaluru-based Swiggy wishes to acquire the food delivery operations. Presently, Zomato is in talks with Chinese e-commerce giant Alibaba’s payment affiliate AntFinancial for investment rounds. This can raise the valuation of Zomato to $1.1 billion. Swiggy recently raised $80 million capital from Naspers and SAIF partners. While Zomato hasn’t responded to queries, Swiggy calls them as baseless speculations.
This development comes after the failed merger take-off between e-commerce titans Flipkart and Snapdeal, and hotel aggregators OYO rooms and Zo Rooms. Competition between both food industry biggies stems from the fact that Swiggy complete 4-4.5 million orders a month whereas Zomato is doing 3-3.2 million orders. With lifestyle and consumption changes in India, the online food delivery market has seen a 150% year-on-year growth in 2016.
Threats are also emanating from international technology disrupts UberEATS and Google’s Aero which are set to enter Indian markets and would possibly discount heavily.
Zomato through its constant efforts and marketing has reached 23 countries and provides information about all the eateries of the city and town. It has raised millions of dollars in funding rounds from Info Edge, Vy Capital, and Sequoia Capital. Zomato even acquired the Seattle based Urbanspoon for $60 million and the Delhi based startup MapleGraph.
YourStory has published a stupendous story of Swiggy’s 17-month journey from bootstrapping to three funding rounds, and how it brought a seismic shift in the food distribution business of India. The rumoured merger of these two titans would definitely be one of the most interesting news of the startup corridors in the country.
Article by Mausam.