TinyOwl, a India-based restaurant delivery service that has raised more than $27 million from investors including Sequoia Capital and Matrix Partners, has reportedly stopped service in all cities except for Mumbai.
Users of TinyOwl’s smartphone app started seeing a notification last week that service will be discontinued after May 22. According to Medianama, the notification is visible everywhere except for some areas of Mumbai, where TinyOwl is headquartered. The startup was previously available in eleven large Indian cities.
— Pranjal Choudhury (@pranjal_1981) May 14, 2016
TechCrunch has asked TinyOwl for comment and will update this post if we hear back from them.
TinyOwl is among several food delivery startups in India that have recently run into operational troubles despite support from marquee investors. Issues include the high cost of logistics and a oversaturated market (Bloomberg reports that more than 400 restaurant delivery startups have been founded in India over the last three years, raising a total of $120 million in funding).
Like Zomato and Foodpanda, two of its biggest rivals, TinyOwl was forced to hold mass lay offs last year. In TinyOwl’s case, the firings reportedly led to one of its founders, Gaurav Choudhary, being detained for two days by laid-off employees over post-dated checks.
TinyOwl, however, may have another shot at life. Earlier this month, several reports emerged that the startup will merge with logistics firm Roadrunnr in an all-stock deal and create a new food delivery service called Runnr. The two companies, which are both backed by Sequoia and Nexus Venture Partners, have yet to officially confirm the deal.
Partnering with Roadrunnr, which handles last-mile deliveries for e-commerce and food delivery companies, may give TinyOwl an advantage over its competitors if it relaunches service. Roadrunnr, however, is dealing with problems of its own. Last month Mint reported that it may exit the e-commerce business after failing to raise more funding. TechCrunch has also contacted Roadrunnr for comment.