- Intro – Food delivery, IPO size, rounds of funding,
- Reasons for the popularity and growth, application and I.T. backbone,
- Availability of funds in the market, Growth of Indian market,
- How can MSME outside India can take advantage of the growth in the market. PEO route.
Online food delivery, as the name suggests, is a service which enables customers to order their favorite food items via a mobile application or a website and get them delivered to their doorstep. It is the end result of some path breaking innovations in the ‘food tech’ space that have leveraged advancements in software and technology in order to completely revolutionize the food delivery experience for the customer.
According to the estimates by IMARC Group, the Indian online food delivery market is expected to grow at a staggering CAGR of 30.1% to clock a whopping US$ 21.41 Billion in revenue by 2026 from US$ 4.66 Billion in 2020. Increasing access to high-speed internet facilities, boosting sales of smartphones, growing working population, inflating income levels, rising trend of on-the-go food items and quick home delivery models that offer convenience, ready-to-eat and cheaper food delivery options are some of the major factors propelling the online food delivery market growth in the country. While the key market players like Zomato & Swiggy have thus far been concentrating on the three largest urban markets of Bangalore, Delhi & Mumbai, their focus is now shifting on smaller cities as well to capitalize on their strong growth potential. Furthermore, the COVID-19 pandemic has forced some of the leading players like Zomato, Swiggy, McDonald’s and Domino’s to think out of the box and introduce contactless delivery services to win customer confidence.
It is no surprise that the exponential growth trajectory and business potential of India’s food delivery industry has been attracting enough and more investor attention over the years, a phenomenon which has sustained even amid a global pandemic. This is perhaps what led to India’s unicorn food delivery giant Zomato launching its much-anticipated IPO to raise $1.3 billion in mid July. This was India’s biggest IPO so far in 2021 and the first of a series of high-profile public listings by tech unicorns, taking the company’s valuation to a staggering ~$9 billion. Zomato was founded in 2008 by Deepinder Goyal and Pankaj Chaddah and has already secured multiple rounds of funding over the years from globally renowned funding behemoths such as Sequoia Capital, Ant Financial, Temasek, Tiger Global, etc. The secret sauce behind Zomato’s popularity and rapid growth has been its unending focus on innovation and agility and its ability to keep up with the increasingly dynamic food delivery landscape in a country full of foodies. The company has continuously leveraged technology to improve both the UX and UI which, supported by a robust IT backbone, has made the mobile application as well as the website increasingly user friendly, feature rich and convenient over the years.
Interestingly, Zomato’s wildly successful IPO speaks volumes about India’s economy and investment landscape which, in spite of being bogged down by multiple waves of the COVID-19 pandemic, has shown exceptional resilience in bouncing back towards a growth trajectory. The proof of this lies in the fact that according to GlobalData, a total of 635 venture capital funding deals were closed in H1 of 2021 alone with a collective disclosed valuation of $9.7 billion. This investor confidence in the Indian economy has been fuelled by its strong underlying fundamentals, government led initiatives like Startup India & Digital India as well as rapidly changing consumer spending and market demands which has collectively created a conducive environment for startups and MSMEs to thrive in. In fact, according to a recent report published by Nasscom, India, which is the third-largest startup ecosystem in the world as of today, will have more than 50 unicorns before 2021 is through and more than 100 unicorns by the year 2025! Against this backdrop, there couldn’t have been a better time for MSMEs located outside of India to seriously consider expanding their business to India in order to capitalize on the country’s fast evolving startup ecosystem and economic growth. A quick and relatively inexpensive way to plan business expansion to India is by taking the Professional Employer Organization (PEO) route. A PEO essentially offers cost-effective solutions relating to HR, payroll, benefits and risk management. In this context, it would help a foreign MSME hire a dedicated world class team and establish a business setup in India within days without having to create a local permanent entity. The PEO would act as the Employer Of Record (EOR) in India on behalf of the foreign MSME while the team continues to work directly for the foreign company. Going the PEO route would also give the foreign company a chance to test the waters in the Indian market before choosing to make any long term commitments. In fact, by partnering with a renowned Indian PEO like Remunance, foreign MSMEs would get the additional advantage of establishing crucial ecosystem connections in India right at the onset by taking advantage of the robust experience and industry wide connections that Remunance has built over the years. After all, Remunance’s PEO services in India have already helped multiple foreign companies successfully expand their businesses to India and subsequently get funded or acquired at much higher valuations!