After scrutinizing the food delivery market for years, SoftBank Vision Fund has finally decided to back Swiggy. SoftBank is reportedly expected to invest $450 million in Swiggy. The deal will make the Masayoshi Son-led SoftBank Group Corp.’s to be the first group to invest directly in the food tech sector in India.
SoftBank Group Corp. investment is all set to raise Swiggy’s valuation to $5.5 billion and the infusion is part of a larger $1.25 billion round, which has been in the works for the past few months. It is to be noted that the financing deal awaits approval from the Indian antitrust regulators.
As it is known Bangalore-based Swiggy competes with multiple food delivery startups in India which includes its arch rival Zomato which is backed by Ant Group Co. and Tiger Global, and the food delivery arm of Amazon.com Inc’s India unit.
Bundl Technologies Pvt. Ltd, SoftBank and Swiggy’s parent, are still negotiating the finer details of the deal and reportedly are yet to sign the shareholder agreement. According to reports, SoftBank Group could invest up to $500 million.
The company is also expected to raise another tranche from sovereign wealth funds Singapore’s GIC Pvt. Ltd and Qatar Investment Authority (QIA).
Reportedly, last week, Swiggy had closed an $800 million funding round from investors including Falcon Edge Capital LP and Goldman Sachs Group Inc. That financing had punctuated a historic week for India’s technology industry as investors had minted at least six new unicorns or startups with a valuation of $1 billion or more.
It is to be noted, that apart from SoftBank, other global investors namely Tiger Global and South Africa’s Naspers Ltd. also see growing opportunity in the country’s startup scene. According to the reports, Indian startup makes a good choice for investment, as the nation of 1.3 billion people has seen the rapid adoption of smartphones in recent years. It is to be noted that explosive growth of inexpensive internet services in India and a new generation of ambitious entrepreneurs, the investment in Startups can prove fruitful to foreign investors.
The venture investments are helping to diversify India’s industry, best known for tech services companies such as Tata Consultancy Services Ltd. and Infosys Ltd. A Credit Suisse Group AG report last month found there are about 100 unicorns in India with a combined market value of $240 billion, in sectors from e-commerce and fintech to education, logistics and food-delivery.
According to reports, globally, SoftBank already owns about 22% in food delivery firm DoorDash, which had gone public earlier this year. DoorDash had seen its valuation rise up to $11.9 billion, as SoftBank had invested $680 million in DoorDash.
Reportedly, after the DoorDash listing, the Vision Fund had started exploring various options for its next investment in food delivery market in India. Anil joshi, managing partner at Unicorn Venture Partners had stated that, “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.” Thus, SoftBank founder and chief executive Masayoshi Son preferred Swiggy over Zomato after evaluating the former’s new bouquet of products.
A person familiar with the mater stated that “SoftBank was aiming to invest in India’s foodtech segment, which continues to grow even during the pandemic. Apart from foodtech, Swiggy has diversified successfully through its grocery delivery service Instamart, building multiple revenue moats and standing out from rival Zomato,”.
It is to be noted that ,with backing from Naspers and SoftBank, Swiggy, the food delivery company will be able to stay private for longer.
SoftBank had earlier invested in Uber Eats indirectly, via its investment in ride hailing platform Uber. Uber Eats India was sold to Zomato in January 2020.