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Zomato’s funding restrictions and apprehension over drone deliveries were key deal breakers for TechEagle

Picture of flying drone

Gurugram-based drone startup TechEagle Innovations, which Zomato had acqui-hired a year-and-a-half ago, has cancelled the acquisition deal and parted ways with the company. TechEagle’s six-member team, including founder & CEO Vikram Singh Meena, resigned en-masse from Zomato on April 30, Meena told MediaNama. MoneyControl first reported on the disassociation between the two companies.

While Zomato said that the companies were no longer “aligned” about their future goals, the deal fell through for other reasons, chief among which were Zomato’s funding restrictions and its apprehension to begin drone delivery in countries where regulations are relatively relaxed.

Zomato’s plans for food delivery via drones will now take a backburner, even though it successfully tested it a year ago. It was also about to pilot remote drone deliveries in partnership with TechEagle in July. Zomato did not respond to additional questions at the time of publication.

Zomato unwilling to invest in R&D, reluctance to experiment with drones

“TechEagle’s team initially got a lot of freedom to work, but after sometime it became difficult for them to scale the technology, majorly because of funding restrictions. Zomato only wanted to focus on drone deliveries in the Indian market, and not overseas, but TechEagle wanted to do it in countries where Zomato offers its Gold service,” a person directly involved in the development told MediaNama on the condition of anonymity. Apart from India, Zomato Gold is available in eight other countries, including in UAE, Australia, Indonesia, Turkey, and New Zealand.

TechEagle  founder Vikram Singh Meena confirmed the financial restraints, stating that Zomato was not willing to invest more in R&D. Zomato also felt that “food delivery via drones might not happen in [the] near future because of regulatory hurdles”.

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The TechEagle team also wanted to experiment with drone deliveries outside of the food sector. TechEagle wanted to “utilise its potential to enable drone delivery for other use cases, such as healthcare, logistics and essentials”, Meena said. “Zomato at its core is food centric and doesn’t want to enter into healthcare and essentials delivery,” he added. “This vision misalignment was the core reason why TechEagle decided to come out of Zomato,” he stated.

Zomato-TechEagle BVLOS drone pilot: What now?

Zomato and TechEagle are due to pilot remote drone deliveries, as part of a regulatory sandbox being organised by civil aviation regulator Directorate General of Civil Aviation. The regulator has allowed several consortia to carry out beyond visual line of sight operations. However, this development has now raised questions on the viability of that partnership. Meena said that there is no final decision on TechEagle’s partnership with Zomato yet. “There’s nothing to comment on. The consortium was out of this disassociation. Me, my team and my drones are deeply involved in this particular thing. But other than that, there’s nothing that has happened right now. Maybe in some time,” he said.

Zomato said that it will participate in DGCA’s experiment, but did not specify if it would be in partnership with TechEagle. “DGCA’s recent permissions to begin testing drone delivery is great — we are going to move forward with our testing as soon as it is safe for our team to travel to the designated testing locations,” Zomato said.

Differences accelerated in past 7 months over COVID-19 opportunity  around deliveries

Differences between TechEagle and Zomato began in December, and accelerated following the COVID-19 outbreak, a source close to the development said. “The two entities went to the table in December to discuss commercialisation. But even then, Zomato insisted on only focusing on food delivery via drones, but Vikram’s team [TechEagle] wanted to get into healthcare and medicine delivery,” the person said. Within a month of the nationwide lockdown, TechEagle team’ resigned. The pandemic also hit Zomato hard, it laid off 13% of its workforce in mid-May, while cutting salaries for others.

With the outbreak of the coronavirus, medicine and essentials’ delivery emerged as a lucrative opportunity.  Zomato’s reluctance to allow TechEagle to experiment with drones for these deliveries didn’t help. “COVID showed that medicine delivery is indeed a potential use case, and is expected to get more regulatory leeway compared to food delivery by drones,” another person said, adding, “this is when they decided it was time to move on”. In fact, Meena was involved in COVID-related drone surveillance in Delhi, albeit in a personal capacity.

Meena confirmed this, and said that “the COVID-19 crisis accelerated the growth of the healthcare sector and no other time could have been better for TechEagle for venturing into contactless medical & essentials delivery via drones which will see hockey stick growth in near future”.

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Ever since the deal fell through, TechEagle has formally signed contracts with two entities dealing in last mile delivery and is currently in talks to secure a deal with the third. Meena did not reveal the name of these companies despite multiple requests, but said that these are Indian companies.

More from our extensive coverage of the drone industry: 

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