Swiggy raises $1 billion in funding, puts Zomato on notice
With this funding, Swiggy has become the fifth most valuable startup in India at a valuation of $3.3 billion, underscoring the stunning rise for a firm that was started four years ago
Bengaluru: Online food delivery startup Swiggy, which entered India’s “unicorn” club earlier this year, has raised $1 billion in fresh capital, marking the biggest ever funding round in the country’s booming food-tech sector and increasing pressure on arch-rival Zomato to quickly raise fresh funds.
With the latest funding, which was led by existing investor Naspers Ltd and also saw participation from China’s Tencent Holdings Ltd, Swiggy has become the fifth most valuable startup in the country, commanding a valuation of $3.3 billion and underscoring the stunning rise of a venture that was launched four years ago. Mint reported on 21 September that Swiggy was in talks to raise at least $700 million in fresh funds from Tencent and others.
Of the $1 billion, $800 million will be primary capital or fresh funds. In the latest funding round, existing investors DST Global, China’s Meituan Dianping and Coatue Management also participated. Apart from Tencent, other new investors included the likes of Hillhouse Capital and Wellington Management Co.
Swiggy’s valuation surged nearly five times in less than a year, as it was valued at roughly $700 million when it raised $100 million in February from South Africa’s Naspers and others. Avendus Capital advised Swiggy on the latest fundraise.
Swiggy, run by Bundl Technologies Pvt. Ltd, has so far raised roughly $1.27 billion, with a majority of it being raised this year across three separate funding rounds. Existing investors such as Accel Partners and Bessemer Venture Partners have received partial or complete exits for their existing stakes, according to two people aware of the discussions. In total, new investors bought secondary shares worth nearly $200 million from existing shareholders.
In June, a $210 million funding round made Swiggy a unicorn (startups with a valuation of $1 billion or more). Only Paytm (One97 Communications Ltd), Ola (ANI Technologies Pvt. Ltd), Oyo (Oravel Stays Pvt. Ltd) and Byju’s (Think and Learn Pvt. Ltd) are now ahead of Swiggy in valuation. It competes with Zomato, UberEats and Ola’s Foodpanda. Flipkart was India’s most valuable startup, before being acquired by Walmart earlier this year.
The fundraise puts more pressure on rival Zomato, which has so far raised more than $400 million and was last valued at $1.1 billion. In the business of food delivery, top companies such as Swiggy and Zomato need to keep raising capital to win share in a cut-throat, hyper-competitive market.
Zomato is in talks to raise fresh funds, according to three people aware of the discussions. Mint first reported on 3 August that Zomato was in talks with SoftBank’s Vision Fund to raise fresh funds. Mint also reported in June that Zomato was in talks to raise $400 million at a valuation of as much as $2 billion. Zomato, which has closed the gap with its arch-rival in food delivery over the past year, received $150 million in fresh capital from Ant Small and Micro Financial Services Group in February.
Swiggy is expected to use a significant chunk of the fresh funds to enter new businesses and areas, especially in the hyperlocal space. Swiggy’s plans to ramp up and enter new areas have intensified over the past six months and drawn comparisons to the playbook adopted by Chinese food delivery giant Meituan Dianping, which, over the years, diversified and entered a number of new hyperlocal delivery businesses. Meituan also happens to be an existing investor in Swiggy. Mint reported on 18 December that Swiggy is evaluating an entry into medicine delivery.
In an interview in August, its co-founder and chief executive officer, Sriharsha Majety, indicated that the online food ordering and delivery startup would be experimenting with a bunch of new offerings over the months ahead.
“We are experimenting with some such (hyperlocal) categories,” Majety said in the interview. “We’ve been closely observing our consumers’ lives and we feel that there are some unique capabilities that we have that can take a shot at solving more problems, even outside the realm of food. You’ll see us start making small forays into new areas.”
Since its last funding round six months ago, Swiggy has expanded to 42 additional cities and has nearly doubled its gross merchandise value, according to the company.
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