Swiggy in talks to raise $50 million in fresh funds
Latest News »
- 12-year-old boy dies of dengue, first fatality in Delhi: MCD
- First set of GST tax deposits nets govt Rs42,000 crore
- Essar Oil CEO resigns as Rosneft rejigs board on $13 billion takeover
- ISRO chief Kiran Kumar says looking at consortium for PSLVs
- Arun Jaitley to meet CMs to firm up NITI Aayog’s 3-year action agenda
Bengaluru: Onlinr food delivery start-up Swiggy (Bundl Technologies Pvt. Ltd) is in talks with potential investors to raise at least $50 million in fresh funding, a move that is likely to give the company significant financial heft over rival Zomato Media Pvt. Ltd, said two persons aware of the development.
Swiggy is in talks with South African media company Naspers Ltd and Chinese conglomerate Fosun International Ltd to raise fresh capital. Existing investors are likely to participate, these people said on condition of anonymity.
Swiggy is among the best funded food delivery start-ups in India, having raised at least $75 million in equity from Accel Partners, Bessemer Venture Partners, Harmony Partners, RB Investments, Norwest Venture Partners, SAIF Partners and Apoletto, the personal investment firm of Russian billionaire and founder of DST Global, Yuri Milner. Besides, Swiggy has raised about $8 million in venture debt from InnoVen Capital.
This is second only to Zomato’s $224 million among home-grown food technology start-ups.
“Swiggy has ample cash in the bank but they want to strengthen the war chest further. With this round, they will get some financial cushion. The existing investors are likely to pool in at least $20 million,” said one of the two people cited above. A deal is yet to be closed, this person added.
Swiggy did not respond to an email seeking comment. Naspers declined to comment.
Swiggy currently operates in eight cities—Bengaluru, Delhi, Mumbai, Chennai, Pune, Gurgaon, Hyderabad and Kolkata. The company is also piloting its own kitchens in Bengaluru.
Swiggy competes with the likes of Zomato, Foodpanda India and Runnr (Carthero Technologies Pvt. Ltd), the entity created after the merger of food delivery start-up TinyOwl Technology Pvt. Ltd and hyperlocal delivery start-up Roadrunnr. Food start-ups are among the segments worst hit by a slowdown in funding, which have prompted companies to hold back on expansion while burning huge amounts of cash to lure customers through offers and discounts. Some investors released cash only when certain business goals were achieved.
Some food start-ups such as Dazo and Eatlo shut shop, while others were acquired. For instance, hyperlocal grocery delivery start-up Grofers bought Spoonjoy.
Swiggy posted a near 65-fold increase in losses for the fiscal year ended March 2016, indicating heavy cash burn in food start-ups, Mint reported on 18 November, citing the Registrar of Companies.
Swiggy’s revenue rose to Rs23.59 crore for the year ended 31 March from Rs11.59 lakh a year earlier. Losses bulged to Rs137.18 crore from Rs2.12 crore in fiscal 2015, the company’s filing with the Registrar of Companies shows. Total expenses stood at Rs160.77 crore, implying that Swiggy burnt about Rs13 crore per month in FY16.
Swiggy’s peers in the US such as Postmates and DoorDash charge a fee of $3-7 for each delivery. According to industry experts, the average order value in the US is around $20, significantly more than the average Rs300-400 in India. Consequently, delivery companies in India, which charge clients a commission of 10-20% of the order value, end up losing money on every delivery that costs upwards of Rs50.
To be sure, Swiggy charges consumers an additional fee of Rs50 for orders of less than Rs250, a move which has not only helped the company pare losses, but also increase average order value, co-founder and chief executive Sriharsha Majety said in an interview in November 2015.