Bengaluru: Online food delivery start-up Swiggy, owned by Bundl Technologies Pvt. Ltd, has raised $15 million in a Series D round of funding from Bessemer Venture Partners and existing investors Accel Partners, SAIF Partners, Norwest Venture Partners and Apoletto Asia, the company said in a statement on Monday.
The fresh infusion of funds is likely to help Swiggy to better compete with the likes of Zomato Media Pvt. Ltd, 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.
Swiggy had raised $42 million in a Series C funding round in two tranches from a clutch of new and existing investors. The first tranche of $35 million in January this year saw participation by all existing investors and two new ones: Harmony Partners and RB Investments.
The company raised the second tranche of $7 million from Apoletto Asia, Accel Partners and Norwest Venture Partners in May.
Earlier, the company had raised $2 million in a Series A round from Accel Partners and SAIF Partners in April 2015 and $16.5 million in a Series B round from Norwest Venture Partners, Accel Partners and SAIF Partners in June last year.
The company’s fund raising stands at $75.5 million, second only to Zomato’s $224 million among home-grown food technology start-ups.
“We are excited about the funding as this is a validation of our performance and recognition of our leadership, in addition to being testament to the tremendous potential of the food tech sector,” Sriharsha Majety, co-founder and chief executive at Swiggy, said in a statement.
“Our strong growth in the last few months shows that our customers are increasingly becoming accustomed to a new behaviour of ordering food for the experience, rather than only for convenience,” Majety added.
While companies such as DoorDash and Postmates have made it big in the US, food delivery has turned out to be a challenging niche in India, mainly because of low average order value and high delivery costs.
“Only 2% of the entire food ordering market is online and there is still huge untapped potential. There are different consumer needs, which will drive the next phase of growth. In a bid to power the next phase of growth, Swiggy has recently ramped up its senior leadership by hiring vice-presidents across functions. Their expertise will be instrumental in shaping the strategy and maintaining Swiggy’s leadership position in a fast-growing category,” said Majety.
The fresh funds will be deployed in technology upgrades, getting a wider range of restaurants on board and enhance delivery efficiency. The company, which claims to achieve unit level profitability in Bengaluru and Hyderabad, will however, will not expand beyond the eight cities where it is currently operational, he added.
Majety did not comment on the number of daily orders serviced by Swiggy.
Avendus Capital advised Swiggy on the deal.
According to industry experts, the average order value for food in the US is around $20, about four times more than the average Rs. 300 (about $4-5) in India. As a result, delivery firms in India, which charge clients a commission of 10-20% of the order value, end up losing money as each delivery costs more than Rs.50.
Swiggy faces stiff competition from Zomato, which entered the food delivery business in April last year. In an interview with Mint in December, Zomato co-founder Deepinder Goyal said the company will invest $40 million in its food-ordering business over the next six months to capture a dominant share of the market in India and the United Arab Emirates.
Another competitor, Rocket Internet-backed Foodpanda India, raised about Rs.150 crore from its Berlin-based parent between July 2015 and June 2016. The company has appointed investment banker O3 Capital to raise another round of funds for its India business, Mint reported on 31 August.