According to a report in ET, the speculated Roadrunnr TinyOwl merger has been confirmed in an all-stock deal. Both entities are planning to launch a new food delivery platform called Runnr in the next three weeks.
Under the deal, Roadrunnr has bought in the brand name of TinyOwl along with its technology, data analytics, sales, support and the management team.
“Roadrunnr will leverage its logistics capabilities, and Tinyowl’s consumer experience and technology to differentiate and scale ourselves more efficiently than competitors,”
said a senior executive to the ET.
However, TinyOwl will not shut down immediately, particularly from areas where there is a high volume of orders. It will be phased out gradually to the new brand identity of Runnr.
Citing multiple people familiar with the development, the ET report also revealed that Runnr will be launched in Mumbai in the next three weeks. By that time, terms of deal will also get finalized within a week or so.
Both TinyOwl and Roadrunnr are backed by a common set of investors which include Sequoia Capital and Nexus Venture Partners.
TinyOwl, like other food tech startups in the country, has not been in any good health. Despite raising close to $28 million in 4 rounds of funding, TinyOwl apparently struggled with achieving profitability through a sustainable business. It had also laid off over 300 employees last year for the purpose of restructuring and cost cutting.
RoadRunnr offers logistics services to e-commerce companies through an on-demand model to partner delivery boys and manage lean and peak demand, and charges businesses a flat rate per delivery.
However, it has also not been able to sustain its business operations efficiently due to increasing losses and due to its inability to raise fresh funds.
This also validates another report in March acoording to which Roadrunnr was planning to exit the e-commerce business completely and instead focussing on smaller and more profit generating categories like food, groceries and merchant-to-merchant, or first-mile deliveries.
The RoadRunnr TinyOwl merger marks the first major consolidation in hyperlocal delivery space which has only been witnessing shut downs so far despite being a hot favorite of investors last year.