500 Million Customers Targeted
The India-based startup company Swiggy welcomed new business investors in the latest funding round, including sovereign wealth funds Qatar Investment Authority and Singapore’s GIC. Existing investors, including Prosus Ventures and Accel, also participated in the round. Prosus Ventures is also Swiggy’s largest shareholder.
Swiggy raised $158 million in February 2020 and hit a business valuation of roughly $3.7 billion. The Economic Times media outlet reported in February that the startup is in talks to raise $700 million to $800 million.
According to Sriharsha Majety, a co-founder of the startup, the latest funding round was oversubscribed as investors seek exposure to a booming food delivery industry amid the COVID-19 pandemic.
“Over the last one year, thanks to all your efforts, we’ve managed to drive a strong recovery in the food delivery business with a very clear path to profitability. The food delivery business is the strongest it has ever been, and we are now well on our way to drive continued growth over the next decade,” Majety told TechCrunch.
Swiggy aims to serve 500 million users in the following 10-15 years, similar to Chinese food delivery platform Meituan, which registered 500 million transacting users in 2020 and reached a business valuation of more than $100 billion. Zomato, an Indian food delivery startup company backed by Uber, is seen as Swiggy’s biggest rival as well as Amazon.
“The fundraise gives us a lot more firepower than the planned investments for our current business lines. Given our unfettered ambition though, we will continue to seed/experiment new offerings for the future that may be ready for investments later,” Majety adds.
Both Swiggy and Zomato were forced to lay off employees last year during the COVID-19 pandemic. The startup also reduced its cloud kitchen efforts in a bid to survive the crisis as New Delhi was forced to impose a months-long lockdown.
Zomato raised $910 million in two separate financing rounds in recent months, as the company gears up for its initial public offering (IPO) later this year. Following the latest round, Zomato reached a business valuation of $5.4 billion.
Moreover, the ecommerce business behemoth Amazon also forayed into the food delivery market in India last year. However, the company still operates only in certain parts of Bangalore. At the moment, Zomato dominates India’s food delivery market with roughly a 50% share.
Analysts at Bernstein estimated the food delivery market in India to hit a business valuation of $12 billion by 2022.
“We find the food-tech industry in India to be well positioned to sustain growth with improving unit economics,” Bernstein analysts wrote in a note.
The Indian online food delivery startup Swiggy raised $800 million in the latest funding round to reach a valuation of about $5 billion. The net proceeds will equip the company to take on Zomato, India’s biggest food delivery company.