Online food ordering giant Swiggy said on Wednesday it has raised USD 113 million in its ongoing Series I funding round led by its existing investor Naspers with participation from Chinese on-demand services giant Meituan Dianping and Boston-based investment firm Wellington Management Company.
The funding comes at a time when its arch-enemy Zomato has gained strength in Swiggy’s strong market—south Indian cities—after acquiring the common competitor, Uber Eats India.
The latest funding, which is a part of a larger USD 150 million round, values the company at nearly USD 3.6 billion, local media Economic Times (ET) reported citing sources. Swiggy’s valuation has remained pretty flat since December 2018, when it had raised USD 1 billion from Naspers, Tencent, Hillhouse Capital, and Wellington Management Company at a valuation of USD 3.3 billion.
Naspers, which is the largest investor in Swiggy with a 40.6% stake, has poured in about USD 100 million to the new funding round, as per the ET report. Meituan, meanwhile, holds a 6.35% stake in the startup.
Alibaba-backed Zomato is also refueling its tank with an ongoing funding round from Ant Financial. As a part of USD 600 million funding, the Gurugram-based food delivery company received USD 150 million in early January at a valuation of USD 3 billion. The rest of the funding is expected to come over the next month, as per the media reports. Late last month, Zomato acquired Uber Eats India in an all-stock deal valued at around USD 350 million, which gave Uber a stake of 9.99% in Zomato. With the Zomato-Uber Eats merger, India’s soon-to-be USD 17.02 billion food-delivery-market is largely a duopoly now.
Swiggy plans to use the new funds to expand its hyperlocal delivery services, Swiggy Stores, Swiggy Go, and SuprDaily.
“Having grown beyond food delivery, Swiggy aims to use the funds to further develop its new lines of business, addressing visible gaps in the market,” the company said in a statement, adding it will continue to invest in “new growth areas (Stores, Go, and SuprDaily), as it delivers on its promise of bringing unparalleled convenience to the lives of urban consumers.”
According to the company, its transaction numbers shot up “nearly 2.5x this past year,” and the restaurant partner base grew “4x to over 160,000 partners with over 10,000 new restaurants being added every month.” Swiggy claims to have more than 250,000 delivery partners across 520 cities. The company reportedly clocks about 1 million to 1.4 million daily orders. Last year, Swiggy claimed to have a 60% market share. However, a RedSeer report pegs Swiggy’s market share at 43%, while putting Uber Eats India and Zomato collectively to have a 52% market share.
“Over the last couple of years at Swiggy, we have made strong strides in our vision of delivering unparalleled convenience to urban consumers, and in building a fundamentally strong and enduring business while keeping the consumer at the core…” Sriharsha Majety, CEO of Swiggy, said in a statement. “We are laser-focused on continuing to execute on our vision while building a sustainable path to profitability.”
The company, which has been making losses for the last six years of its existence in lieu of growing its business, has forecasted a net profit of USD 119.4 million (INR 858 crore) on revenue of USD 1.5 billion in 2022, the ET report said citing a valuation report submitted by the company to Indian regulators. Although, for the current financial year 2019-20, Swiggy expects a net loss of USD 148.6 million (INR 1,067 crore) on the revenue of USD 185 million.
“When we first partnered with Swiggy three years ago, we recognized the Swiggy team had built a sustainable, long-term business, that stood out amongst others in India,” said Larry Illg, CEO, Prosus Ventures and Food (formerly Naspers Ventures and Food), in a statement. “Swiggy has built a solid leadership position in India and is utilizing its strong logistics network and consumer loyalty to expand its offering to services that continue to make consumers lives more convenient,”