Online food delivery company Swiggy on Thursday said it had raised $1 billion in its latest funding round, led by Naspers. Although the food delivery platform set up shop in mid-2014, it had attracted just about $500 million.
Persons close to the development claimed the business was now valued at an estimated $3.3 billion. Swiggy could use the money given the business reported losses of Rs 640 crore in the three years to March 2018, on revenues of close to Rs 600 crore.
Moreover, competitors Zomato and Foodpanda too are loading up on cash. Analysts say the surge in fund raising by both food and grocery delivery players has “materially altered the narrative in these spaces and that they are spending heavily on customer acquisition once again”. As they scale up, the losses could widen, at least in the next couple of years.
Analysts peg the takeaways plus deliveries segment at just about $3 billion, of which, online ordering market is a small fraction. Since the delivery market is estimated to be about a fourth of the takeaway space and traffic on India’s streets isn’t about to vanish, the demand for deliveries, analysts say, cannot but go up. Another interesting data point shows that less than a third of India’s online customer base orders food on the internet. That’s partly because delivery companies service just about 6-8 cities.
Fresh round aimed at future, including AI-driven platforms
The billion capital infusion into Swiggy, which entered India’s unicorn club earlier this year, marks one of the biggest ever funding round in the country’s food-technology sector. Following this infusion by new investors, Swiggy commands a valuation of over billion for a firm that was launched less than five years back. This places Swiggy in an advantageous position to take on competition — Zomato, Ola’s Foodpanda and UberEats. The fresh funding round is aimed at the future, including AI-driven platforms for hyperlocal discovery and on-demand delivery.
Avendus Capital was the investment banker for the transaction. Other investors who participated in the latest series of funding include DST Global, Meituan- Dianping and Coatue Management, along with new investors Tencent, Hillhouse Capital and Wellington Management Company.
The Bengaluru-based unicorn said the funds would be used to address gaps in supply through delivery-only kitchens. Additionally, Swiggy will use the capital to hire talent, especially for machine learning and engineering roles across mid and senior levels. The company will further strengthen its technology backbone and focus on building a next-generation AI-driven platform for hyperlocal discovery and on-demand delivery. —FE