On Monday, Swiggy said that it has raised a whopping $800 million in the latest funding round. Swiggy announced this news to its employees. With the current funding, Swiggy plans to expand its operations in India. Last year, a pandemic hit the food delivery startup very badly. Swiggy reduced the workforce also due to the limited business activities.
Financial Details of Swiggy
Swiggy CEO and Co-founder Sriharsha Majety sent an email to all its employees about the $800 million funding raise in the latest financial round. The online food startup collected this funding from new investors, including Falcon Edge Capital, Goldman Sachs, Think Capital, Amansa Capital and Carmignac, and existing investors Prosus Ventures and Accel. Times of India Journalist Digbijay Mishra reported the current funding round news first.
As reported by TechCrunch, Majety wrote in his email:
“This fundraiser gives us a lot more firepower than the planned investments for our current business lines. Given our unfettered ambition though, we will continue to seed/experiment with new offerings for the future that may be ready for investment later. We will just need to now relentlessly invent and execute over the next few years to build an enduring iconic company out of India.”
Though Swiggy did not reveal the current valuation, it is assumed that the company market cap has reached $5 billion approximately. The online food delivery giant has raised a total of $2.2 billion to date.
Swiggy had raised $113 million last year at about a $3.7 billion valuation. That investment is not part of the new round, a person familiar with the matter told TechCrunch.
Swiggy plans to serve 500 million users in the next 10-15 years. The startup has Zomato as its strong competitor. Amazon has also started a food delivery business but is limited to Bangalore currently. Swiggy wants to follow the footsteps of Chinese online food delivery firm Meituan that had 500 million transacting users last year. Meituan has a whopping valuation of $100 billion.
Talking about the long terms goal, Majety said:
“We’re coming out of a very hard phase during the last year given Covid and have weathered the storm, but everything we do from here on needs to maximise the chances of our succeeding in the long-term.”
Future of Swiggy
Last year was not good for Swiggy like other industries. It fired some employees also to stay relevant. Zomato also did the same when the lockdown was going on in India.
Recently, Zomato also announced a funding raise of $910 million. Zomato has a market cap of $5.4 billion. And it is planning to start its IPO very soon. Talking about the funding raise, Zomato said:
“It was raising money partially to fight off “any mischief or price wars from our competition in various areas of our business.”
Swiggy should not ignore the new player that has recently entered the food delivery field. This new startup is Amazon that has started online food delivery in Bangalore. Once it starts its operations nationally, it may give sleepless nights to Swiggy.
As per Bernstein Study, the online food delivery industry will be worth $12 billion by 2022. Zomato is the market leader in online food delivery. It has a 50% market share.
Taking about the future growth of the food tech environment, a Bank of America Analyst said:
“We find the food-tech industry in India to be well-positioned to sustained [sic] growth with improving unit economics. Take rates are one of the highest in India at 20-25% and consumer traction is increasing. The market is largely a duopoly between Zomato and Swiggy with 80%+ share.”
He further added:
“The food delivery business is the strongest it’s ever been, and we’re now well on our way to drive continued growth over the next decade. Also, some of our new bets like Instamart [grocery delivery business] are showing amazing promise while we’ve also made strides in setting up some of our other adjacencies for liftoff very soon.”