In a news that may make investors and customers happy, Bengaluru based BigBasket and Gurugram based Grofers may be merging to form one big hyperlocal grocery delivery company. It is belived that the founders of both the companies have had informal merger talks before and the matter may be taken up seriously by the board of Big Basket during its board meeting that would happen at the end of this month.
It is believed that if the deal goes through, the focus of the merged entity may move from increasing transactions per day at a rapid pace to achieving profitability. Grofers has had a very rough 2016 as its losses increased by 15 times its revenue dropped by 32%. BigBasket did manage to triple its revenue but even it ended up making heavy losses.
Investors are worried about getting the companies to a stage where they no longer rely on burning cash to grow or even sustain themselves. Most of the internet companies and startups rely heavily on burning cash at a rapid pace and then raise more cash to keep themselves afloat. Some investors believe that it may be a decade till they see their companies break even.
The next step will depend on how well BigBasket raise money in its next round. BigBasket has hired Morgan Stanley to raise $150 million for the next financing round. The round is expected to close by April. If this round does not go as per the company’s expectations, the chances of the merger happening are more as Grofers is said to be having over $60 million in its bank from its previous round.
The founders of Grofers and BigBasket refused to comment on the reports in the media and have categorically refused to comment as they do not comment on market speculations. What is to be seen is how soon can the announcements made be worked on.