While investor sentiment continues to be a bit skeptic over profitability of food delivery businesses, Tiny Owl, post those reported job cuts, is back among funding news. The Mumbai-based upstart has now raised Rs 50 crore from existing investors led by Sequoia Capital and Matrix Partners.
TinyOwl, which functions exclusively as a mobile app on the Android and iOS that lets users order food from restaurants around them. The firm is looking forward to use this fund to conceive better cash-in methods and power its extensive restructuring process.
In February, TinyOwl raised Rs 100 crore led by Matrix Partners India with participation from Sequoia Capital and Nexus Venture Partners.
Harshvardhan Mandad, CEO at TinyOwl said –
In the last few months, we have fully outsourced our last-mile delivery to partners including Roadrunnr, Opin o, Shadowfax. This move helps us focus sharper on our core technology and processes as well as significantly cut costs of delivery. Our costs have come down by 43 per cent with this realignment. Going ahead, we are looking to fully move our order processing to a merchant app and keep our call centre only for escalations and select restaurants.
The segment, reportedly worth $50 billion is growing at 16-20% annually. Unfortunately, we have also managed to notice some disruptions in the natural flow of foodtech business. Food tech startups have started to loose their traction and are not as glorious as they were when they started to tap the market.
A possible reason for downfall in economics for these startups might be that customers in India typically don’t pay an additional amount for delivery. This loss is often paid by the host companies and simply doesn’t translate into viable unit economics for foodtech and hyperlocal startups.
Last month, Tinyowl reportedly fired 600 employees, while Helpchat let go of over 150 employees in October. Most recently, Zomato cut 10% of its global workforce. All the above reported the move as a cost cutting methodology and to have a better control over the organization.