Zomato enters B2B foodtech space by acquiring TongueStun for $18 M

[Update: Deepinder Goyal, Co-founder and CEO, Zomato, confirmed the acquisition deal via email post publishing of the story]

After Zomato’s big acquisition push in 2015 and 2016, the Delhi-NCR based foodtech startup has now acquired TongueStun, a Bengaluru-based online caterer and office canteen aggregator. Media reports suggest that the cash and stock deal was valued at $18 million. 

Founded by Manjunath Ramakrishnan, TongueStun follows an online marketplace model and has raised close to $5 million from Uniqorn Ventures and 03 Capital, a fund focused on hospitality. TongueStun has over 1,500 companies on its platform and has over 1,000 curated food partners. Some of the company’s clients are Mindtree, Accenture and Deloitte. 

With this acquisition, Zomato makes its entry to the B2B segment. TongueStun will now be incorporated into the Zomato app, and reports suggest that the Ant Financial-backed unicorn will be using TongueStun’s network to help restaurant partners to cater to a larger corporate market. 

An official statement of the company says:

"Food at work is an important segment and TongueStun is the largest player in the segment. We see immense growth opportunity in the food at work space and with the help of TongueStun we hope we're able to delight users at their workplaces as well. This market is very high frequency, and customers are very sticky as they end up placing more than 20 orders a month on the TongueStun platform. The team at TongueStun has worked hard to build an incredible produce and service and will not change. The team at TongueStun will continue to learn and grow in their current roles. In fact even the services will continue as is, in the same shape and form for all business partners."

The statement adds with time TongueStun's app capabilities will be available on Zomato. "We will also use the TongueStun network to provide more opportunities to our restaurant partners to cater to a larger corporate market."

The B2B food delivery space seems to be getting some traction as earlier this year HungerBox, a Bengaluru based B2B foodtech platform, raised $2.5 million in pre-Series A funding led by Lionrock Capital and Kris Gopalakrishnan, Co-Founder, Infosys. HungerBox also counts GrowthStory, the venture-builder platform founded by serial entrepreneurs K Ganesh and Meena Ganesh, as one of its promoters.

Zomato had last year acquired Runnr, the Bengaluru-based hyperlocal delivery platform, to up its delivery game and compete with Swiggy. The company has made over 12 acquisitions so far and most of the acquisitions were made in 2015 across different geographies.

On Tuesday, Zomato also announced that it would be delisting a set of FSSAI non-compliant restaurants from its platform. 

The team claims its food delivery business is set to touch close to 2.5x in the next four months and has a monthly order run rate of 16.5 million. The team has a fleet of over 55,000 delivery partners, and it delivers food in 34 Indian cities presently. 

It is interesting to see that both the foodtech unicorns - Swiggy and Zomato - are in an aggressive growth battle. Swiggy has acquired 48East and Mumbai-based Scootsy and has also launched Swiggy Access, Capital Assist and Packaging Assist. 

Both the companies are at loggerheads and if sources are to be believed, Swiggy is said to be in talks to raise an additional $200 million funding from Chinese investor Tencent at a valuation of $2.5 billion to $3 billion. 

It will be interesting to see how this food battle will pan out.