Ola acquires Foodpanda, pumps in $200M: will it now take on Uber in the food delivery space?

Ola acquires Foodpanda, pumps in $200M: will it now take on Uber in the food delivery space?

Tuesday December 19, 2017,

4 min Read

Ola today announced a partnership with Delivery Hero, the Germany-based online food delivery platform, which had earlier this year acquired Foodpanda. As a part of this partnership, Ola will acquire the Foodpanda business in exchange for a percent of Ola's stock. While the details of the deal were undisclosed, a source close to Ola confirmed that Ola will be getting into the online food delivery business.

A press note sent by Ola said that the Bengaluru-based cab aggregator business has committed to invest $200 million into the Foodpanda India business. While Saurabh Kochhar, Foodpanda's CEO, will move on from this role, Pranay Jivrajka, Founding Partner, Ola will take on the business as interim CEO.


Bhavish Aggarwal, CEO and co-founder, Ola

Bhavish Aggarwal, Co-founder and CEO Ola, added that they are looking to take the Foodpanda India business to the next level. The $200 million invested will be focussed on creating more value and growing the business. Foodpanda currently claims to have 15,000 restaurant partners in across 100 cities in the country. Interestingly, UberEATS was launched in May this year, starting with Mumbai. Since then the latter has been pushing aggressively into India market by acquiring delivery boys and adding more restaurant partners each passing week. 

"We have been offered close to Rs 30,000 a month guaranteed salary, if we join Uber," says a 25-year-old delivery boy in Bengaluru, where Uber recently launched its operations. Interestingly, Ola had started Ola Cafe in 2015, but after a few months of the pilot, had shut operations.

Also, Delivery Hero had acquired Rocket Internet's Foodpanda the end of last year. This year, Delivery Hero also went public at a valuation of $5 billion. According to Delivery Hero's numbers, revenue from Asia was at €35.5 million, while Middle East was at €41.8 and Europe was at €48.6 million.

Niklas Östberg, Chief Executive Officer and Co-founder of Delivery Hero AG, said in a press statement,

The partnership with Ola will allow us to further consolidate markets where it strategically makes sense to collaborate with leading local players. At the same time, we consider our stake in Ola as a very valuable asset, while Ola's investment commitment in Foodpanda India is a clear and confident signal to the Indian market.

Foodpanda was one of the casualties of the 2016 Foodtech bloodbath that massacred several food startups. The reigning hero of the bloodbath happened to be Swiggy and Zomato. Both, however, haven't been taking their top spot for granted. Swiggy has been aggressively pushing into the cloud kitchen space; in a span of two months it has launched Swiggy Access and has also acquired 48East. Besides, it is testing Swiggy Pop, a short-time delivery service in Koramangala, Bengaluru.

Zomato on the other hand has acquired Runnr and has launched Zomato Gold in India. Swiggy has raised a Series E funding, but Ola pumping in $200 million is arguably one of the single largest investments made in this space. Ola recently raised $1.2 billion from SoftBank. It is also interesting to note that Uber is set to raise $10 billion from SoftBank.

Since Uber started out in India two years back, the San Francisco-based giant and Bengaluru-based unicorn have been at loggerheads. One has been following the other within months, be it bike sharing, rentals or if rumours are to be believed even autos. Now with Ola acquiring Foodpanda, it will again be following Uber.

In the US, UberEats took a year to break into its competition’s space and they did it with one thing — by being patient. Whether they can wait in India too, with the existing strong players — only time will tell. Also, Ola will now compete with Swiggy and Zomato. Looks like the foodtech run is again set to begin in India.