One more acqui-hire in hyperlocal market in Indian Startup eco-system.
Hyperlocal delivery start-up Grofers has bought business-to-business logistics service provider Townrush, closing its second acquisition in a week.
Hyperlocal delivery start-up Grofers has bought business-to-business logistics service provider Townrush, closing its second acquisition in a week, said one person aware of the development. The Gurgaon-based company, owned by Locodel Solutions Pvt. Ltd, bought Bengaluru-based food tech start-up SpoonJoy (Emvito Technologies Pvt. Ltd) last week, Mint reported on 24 October.
Both acquisitions are essentially acqui-hires, where a company is bought for the team instead of its existing business. SpoonJoy and Townrush will cease to exist as independent entities.
The Times of India first reported the acquisition of Townrush.
Founded in May this year by former Flipkart executives Saurya Prakash and Ashutosh Banerjee and former Facebook executive Tushar Bisht, 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.
The early sellout of SpoonJoy and Townrush reflects a grim scenario where institutional capital is no longer easily accessible, which was the case earlier this year when a string of start-ups in the hyperlocal delivery and food tech segments secured funding. But many of these companies are struggling to raise follow-on rounds, and thus finding it difficult to keep themselves afloat.
Even bigger companies such as Zomato Media Pvt. Ltd and Tinyowl Technology Pvt. Ltd had cut jobs recently to streamline operations.
Mint reported in August that there are early signs of a slowdown and start-ups in overcrowded sectors will either fail to get higher valuations in subsequent rounds or not find fresh funds, leading to cost cuts and consolidation over the next one year.
The ripple effect of ebbing investor interest are being felt in the food tech sector with restaurant aggregator Dazo and Internet-first kitchen SpoonJoy shutting shop barely a year after starting operation.
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, respectively.
Learn more about accounting outsourcing at Aristotle Consultancy.
Source – Livemint