Swiggy turns decacorn, raises $700 mn from Invesco, others

Food delivery giant Swiggy on Monday raised $700 million in a funding round led by Invesco, at a time shares of several recently listed new age consumer companies are trading sharply lower.

The funding round valued Swiggy, run by Bundl Technologies Pvt. Ltd, at $10.7 billion, a person aware of the matter said on condition of anonymity. This would put it ahead of rival Zomato, which had a market value of $9.64 billion at close of Monday’s trading.

Investors such as Baron Capital Group, Sumeru Venture, IIFL AMC Late Stage Tech Fund, Kotak, Axis Growth Avenues AIF- I, Sixteenth Street Capital, Ghisallo, Smile Group, and Segantii Capital also took part in the round. Swiggy’s existing investors Alpha Wave Global (formerly Falcon Edge Capital), Qatar Investment Authority, and ARK Impact, along with its long-term investor Prosus also participated, Swiggy said.

The latest fundraise follows $1.25 billion round in July 2021 at a valuation of $5.5 billion, a 50% jump from the valuation of $3.6 billion in April last year.

VCCircle reported in December that Swiggy was close to a $700 million fundraise at a valuation of more than $10 billion. In an interview with VCCircle in December, Sriharsha Majety, Swiggy’s chief executive said it would look to diversify its core food delivery business.

Swiggy said it plans to use the fresh capital to further grow its core food delivery platform and expand Instamart, its quick grocery platform. Instamart will reach an annualized gross merchandise value (GMV) run rate of $1 billion in the next three quarters, Swiggy said. “The GMV our food delivery business achieved in 40 months, took Instamart just 17 months, demonstrating the platform benefits of Swiggy. We will double down on this to build more categories in line with our mission of offering unparalleled convenience to Indian consumers,” Majety said.

In December, Swiggy said it will invest $700 million in Instamart. Instamart is now available in 19 cities, and delivery times are optimized, it said.

Swiggy Genie, Swiggy’s pick-up and drop service, is currently available in 68 cities, while its meat delivery and daily grocery service, Supr Daily, is present across all major cities, Swiggy said. Swiggy has also launched Swiggy One, a membership programme with benefits across food, groceries, and other on-demand services.

The company said it will also invest more in the broader ecosystem. Swiggy said the food delivery business has nearly doubled in gross value over the last year. “Our goal is to make Swiggy the platform that 100 million consumers can use 15 times a month. We will continue to invest in our people, products, and partners to create a positive impact on the ecosystem and accelerate the digital transformation in food and grocery delivery and other on-demand services,” Majety said.

Swiggy’s fundraise and valuation boost comes at a time when Zomato, which got listed last year, has seen its market capitalization erode rapidly. Zomato, which had an issue price of ₹76, had seen a blockbuster stock market debut in July 2021. The stock had even hit an all-time intraday high of ₹169 in November, but has slumped nearly 50% since then. On Monday, Zomato shares ended 20% down, closing below ₹100 for the first time, reaching a market capitalization of almost ₹71,944 crore ($9.64 billion).

Other new age technology companies, which got listed last year, have also seen their share prices plunge. The shares of FSN E-Commerce, which owns and operates online beauty and cosmetics retailer Nykaa, have fallen over 30% from their all-time high. On Monday, the stock closed at ₹1,745 apiece.

Paytm, meanwhile, operated by One97 Communications, has been the worst hit, as the stock has fallen over 55% from its issue price of ₹2,150. On Monday, the stock ended at ₹916.

Many shareholders have raised concerns over profitability of these companies. However, Majety was confident about Swiggy’s food delivery business turning profitable soon. “We will see the food delivery category to be profitable in the next two to three years,” Majety said recently.