In a bid to strengthen its market position ahead of its public listing next year, Rocket Internet-backed FoodPanda is set to acquire Mumbai-based food ordering app TinyOwl. (*)

FoodPanda is also looking at a strategic investment in Swiggy, another food-ordering app, based out of Bangalore. According to sources, while talks for TinyOwl are at an advanced stage, the German food-tech giant has started its technology integration with Swiggy.

“FoodPanda is gunning for market share and wants to strengthen its base so as to compete with Zomato globally,” said a person close to the development.

While Swiggy and TinyOwl did not respond to an email, FoodPanda said the company as a policy does not comment on speculation.

According to sources and experts, while FoodPanda is fuelled with fresh funds of about $110 million from Rocket Internet, TinyOwl is struggling with investors for raising a fresh round of funding. It had earlier this year raised about $20 million, led by Sequoia.

TinyOwl has also burnt huge cash in promotions and advertisements and is present only in Mumbai. It has over 4,000 restaurants on its platform.

An investor, who did not wish to be named, said, “Food-tech space is already over-crowded with too many players doing the same things. I see only three dominant players (Zomato, FoodPanda and Swiggy) in this segment.

Increasing competition “This segment will see a major consolidation. TinyOwl is finding difficulty in raising funds.” According to a 2014 report by Traxcn, food technology, especially the food ordering market, is mushrooming with over 120 odd start-ups fighting for a slice of the ₹89,500-crore market.

Of these players, about 60 came up in 2014 alone. In such a scenario, consolidation is inevitable.

Last November, FoodPanda acquired TastyKhana and JustEat India in February.

* Clarification

With reference to the article 'FoodPanda set to acquire TinyOwl' (August 11,2015), Nandan Reddy (Cofounder, Swiggy) has clarified later that reports about strategic investments in Swiggy are unfounded. "Subsequently, news report of a technology integration between Foodpanda and Swiggy is untrue. No such integration has taken place."

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