Food delivery start-up Swiggy on Tuesday said it has raised 105 crore in a Series B round of funding from Norwest Venture Partners, existing investors Accel Partners and SAIF Partners and a global investment entity, whose name was not disclosed.

Swiggy will use the funds to expand to 12 cities, including Mumbai, Chennai and Pune, in the next three months. At present, it operates in Bengaluru, Gurgaon and Hyderabad. The company will invest in growing its 20-member technology team to a 100-member unit that will drive data analysis and food and restaurant recommendation. It also plans to build a robust technology platform and delivery fleet, besides marketing and branding initiatives.

Founded by Sriharsha Majety, Nandan Reddy and Rahul Jaimini in August 2014, Swiggy raised $2 million in Series-A funding from SAIF Partners and Accel Partners in April.

“This investment will help us expand exponentially as we intend to establish ourselves in several new cities by the end of the year," said Majety, the firm’s chief executive.

Unlike Zomato, which accepts orders only on behalf of restaurants, Swiggy maintains a fleet of delivery personnel who pick up orders from restaurants and deliver them to customers.

“Swiggy’s delivery infrastructure solves a major need in the market by enabling restaurants to concentrate on their core business and scale up their delivery revenues," said Sumer Juneja, principal at Norwest Venture Partners India.

Food technology start-ups have attracted ample investor interest of late. According to Tracxn, a company which provides data on start-ups, about 467 crore has been invested in the sector in 2015, with Zomato alone accounting for 320 crore.

The company works with about 750 restaurants and services close to 2,000 orders a day, with an average order value close to 300. Swiggy charges restaurants 20% of the order value.

While companies such as Swiggy and Delyver maintain their own personnel and vehicles to ensure timely last-mile delivery, experts believe it will take significant investment to turn the model profitable. “The delivery costs are really high, but the revenue is not," said Abhishek Goyal, founder of Tracxn. “Until a lot of customers are ordering from the same restaurant, you cannot amortize the delivery cost. One needs to have good liquidity to make money on a unit basis."

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