Online food delivery startup swiggy is on advanced stage of negotiations to close a $700-750-million round of funding led by existing investor Naspers. Funding round is to be led by QIA, GIC, Falcon Edge, and many new participations from some new investors is anticipated. If successful, the valuation of the Bengaluru based startup is estimated to rise to around $5 billion.
Naspers is reported to pump in around $350 million, while a consortium of Korean investors, including STIC Investments and Korea Omega Investment, will together invest in with $50 million.
Sources stated “A total commitment of $540 million has come so far,”. It also added “If existing or new investors don’t give the remaining amount, Naspers may put in more.” Swiggy had previously raised a funding of $3.7 billion valuation in February last year, of which Naspers had raised $158 million in total.
Once the transaction is completed, the company’s valuation will surge almost four times since June 2018. In 2018, the startup had raised $210 million and had gained the “unicorn” status.
It was earlier reported that Swiggy was initially in talks for funding with Softbank but the discussions fell through. This was because the Japanese giant was unclear about the winner of online food delivery startup in India namely Swiggy and Zomato. It had been stated that “Right now it looks like it’s hard to pick a winner between the two. But the two companies are slowly moving into a mature phase and discounts are being cut down, which is good.”
Over the last 8-12 months, Swiggy has been reportedly, aggressively foraying into the hinterland, chasing growth numbers from small town users. Its diversification in small town areas has brought in commendable growth in recent months. In 2019 alone, it had been reported that Swiggy had launched services across 185 towns.
But it is to be noted that the Arch rival Zomato, too, has been on an expansion spree, adding 300 cities to its delivery list. Scrutinizing swiggy’s marketing strategy, it can be seen that it has considerably expanded its offerings, including its hyper-local delivery service of grocery, swiggy stores and fresh produce, and Swiggy Daily for home-cooked meal subscription with enticing aggressive advertising scheme.
The plan for fresh funding will be used to expand its footprint in new regions and strengthen its two new ventures, Swiggy Stores and Swiggy Daily.
Swiggy’s list of existing investors include DST Global, China’s Meituan Dianping and Coatue Management. It has been reported that Tencent, Hillhouse Capital and Wellington Management joined Swiggy’s investor list in December.
It is no news that Indian food delivery market is a booming business that is attracting huge investment from investors around the world. According to market research future , the online food ordering market in the country is pegged to grow by a considerable 16% year-on-year to touch $17.02 billion by 2023.
Anil joshi, managing partner at Unicorn Venture Partners said, “There are only two large players in the space—Zomato and Swiggy. Swiggy has the first-mover advantage in some cases and has demonstrated strong execution too. Investors want to follow leaders; hence we will keep seeing investor interest in a firm like Swiggy.”
It is also to be noted that the fundraising comes at a time when swigg’s arch rival Zomato is reported to go public in the next few months.