One of India’s leading online food aggregator services Swiggy has raised fresh capital worth $1 billion, making it the largest funding round in India’s burgeoning food-tech sector. It saw Chinas largest social media and gaming company Tencent join Swiggy’s largest existing investor Naspers this week. Of this, around $800 million will be primary capital or fresh funds which will help one of India’s fastest growing startups to better capitalise on rapid smartphone adoption across the country.
Backers, old and new
Run by Technologies Pvt. Ltd, Swiggy has raised approximately $1.27 billion so far, with a majority of it being raised this year across three separate funding rounds this year. The latest (and third) round was led by South African media giant Naspers, which put up $660 million.
According to sources close to the development who spoke to Mint, two other existing shareholders Accel Partners and Bessemer Venture Partners either partially or completely divested of their stakes, making way for several new investors who have bought secondary shares worth nearly $200 million back from them. The latest round of funding witnessed participation from new backers including Tencent (31% of which belongs to Naspers), Hillhouse Capital and Wellington Management Co. Among existing investors who participated in the drive were DST Global, Meituan Dianping and Coatue Management.
Swiggy’s rise
With this funding, Swiggy which was recently inducted into the country’s unicorn club now commands a valuation of $3.3 billion and is poised to become the fifth most valuable startup in the country. Swiggy had joined Paytm, Ola, Oyo in the elite club earlier this year. It is currently in competition with other online delivery services like Zomato, Foodpanda UberEats.
Launched only four years ago, Swiggy increased its value nearly five times in less than a year and has been seeking to raise some $700 million in fresh funds since September. After having raised $100 million in February, Avendus Capital advised Swiggy to undertake another fundraising drive.
What can Swiggy achieve now?
The company’s meteoric rise has always been complemented by attractive investment partnerships, as evinced in the latest funding round. With the new funds, Swiggy seeks to venture and diversify into yet-uncharted territories, especially in next-generation AI-driven delivery and on-demand, hyperlocal discovery. To this end, the firm will use the capital to hire top-notch talent, especially for machine learning and engineering roles and strengthen its technology backbone.
This will further help Swiggy plug gaps in delivery and supply, connect to consumers better and improve the quality of food. As we add more firepower to our vision of elevating the quality of life for urban consumers by offering unparalleled convenience, were pleased that visionary global investors share our purpose, CEO Sriharsha told The Hindu.
The company was also contemplating making a foray into medicine delivery as recently as December 18 according to a news report. Swiggy’s plans to expand intensified over the last six months during which it expanded food delivery to 42 additional cities in India and doubled its
gross merchandise value. At the same time, the management also warmed up to the business model adopted by Chinese food delivery giant and Swiggy investor Meituan Dianping.
Investorspeak
Swiggy has ten times the number of orders per month since Naspers’ first investment in 2017, chief executive officer of food and ventures Larry Illg told BloombergQuint, adding that the firm first partnered with Swiggy in April 2017 because of its sustainable, long-term business that stood out amongst others in India.
Naspers also invests heavily in Germanys Delivery Hero and iFood in Brazil besides owning shares in other Indian businesses such as MakeMyTrip and OLX. It recently also made a $1.6 billion profit from selling its 11% stake in e-commerce startup Flipkart this year, which used to be the most valuable Indian startup before the acquisition.
Speaking of investing in Swiggy, Illg added, Our latest round of capital will help to accelerate Swiggys journey of providing unmatched convenience in food ordering and delivery for Indian consumers.”
The latest fundraising success story has also turned up the pressure on arch-rival Zomato which needs to quickly acquire funds to match. Zomato has managed to raise only $400 million worth of funds so far and is in talks to raise some more according to people in the know-how.
Prarthana Mitra is a staff writer at Qrius