Hefty investments on customer acquisition, lucrative discounts and cash-back schemes left many food-tech startups floundering this year, before they actually took off — LocalBanya, Dazo,SpoonJoy among others, are collectively a case in point.
Lesson learnt. Most discovered that while monies burnt on attracting consumers to apps/websites can initially increase valuations, VC/ PE funding and number of app downloads, real-world business runs on a matrix of differentiation and exceptional customer services.
As on date, there are at least 179 food ordering and delivery start-ups in the country, according to Tracxn. As much as an impressive USD150 million had been invested in the online grocery retail and foodservice sector in 2015. But only a handful were able to raise funds beyond a first round, as investors interest ebbed. So, with so many start-ups jostling, will 2016 prompt food tech units to focus on reducing cash burn? Will investors travel back to the sector? Is there a bright future for the right model? Wait and watch.
But things were not so despondent for some others. Zomato made a robust entry into online food ordering, becoming popular rapidly, perhaps thanks to an existing strong consumer familiarity with the brand. Swiggy, Fassos and FoodPanda also look good, at least for the medium term.