Swiggy gets battle ready; raises $210 mn from Naspers, DST Global

Latest round pegs company's valuation at $1.3 billion, making it the most valuable online food ordering platform in India

Online food ordering and delivery service Swiggy has become the latest Indian startup to achieve the unicorn (startup valued over $1 billion) status after raising $210 million (Rs14.28 billion) in fresh funding led by South African Internet giant Naspers and Russian billionaire Yuri Milner-led investment firm DST Global.

Sources confirmed that the funds were raised at a valuation close to $1.3 billion, making Swiggy the second Indian food-tech firm after rival Zomato to be valued at over a billion dollars and currently the most valuable firm in the sector. The company has so far raised over $450 million in its 3 year 10 month lifespan.

Swiggy is shoring up capital to defend its position as India’s largest food-ordering app as rivals Zomato and FoodPanda focus on growth after receiving funds themselves. While FoodPanda’s India business has been acquired by ride-hailing giant Ola, Zomato recently received $150 million from deep-pocketed investor Alibaba’s subsidiary Ant Financials.

“With this investment, we will continue to widen Swiggy’s offerings, along with bolstering our capabilities and plugging the gaps in the on-demand delivery ecosystem,” Sriharsha Majety, co-founder and CEO of Swiggy, said in a statement.

While the company did not confirm it, Swiggy enters an elite club of a dozen or so Indian startups that are valued at over $1 billion, including firms such as Flipkart, Paytm, Ola, MakeMyTrip, InfoEdge, InMobi and MuSigma. 

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The company said the latest round of funding would help grow its supply chain and enter new markets. Since February, Swiggy has launched its services in Kochi, Coimbatore, Nagpur and Lucknow, taking the total number of cities it operates in India to 15. The company claims it has over 35,000 restaurant partners and a delivery fleet of over 40,000 riders.

The return of investor confidence in India’s online food ordering space is largely being driven by the stickiness of customers that platforms such as Swiggy and Zomato have shown. Even after the bloodbath of 2016 and drying up of funds, which led both players to cut their burn rate, they were still able to attract customers to their platforms to order food.

With the return of capital into the space, experts and industry watchers say there could be a land grab between the top players through major discounting. All players have already slashed delivery costs and are pushing more offers to customers since the start of 2018. UberEats, the newest entrant, is also rapidly scaling up its operations in major metros.

“This infusion of capital, making Swiggy the best-funded food delivery platform in India, ensures that ambitious plans for broadening their platform and expanding their reach across India will be realised,” said Larry Illg, CEO of Naspers Ventures.

Apart from the two marquee investors that led the latest round, Swiggy roped in China’s Meituan-Dianping, which made its debut as an investor in the company in the February round, along with new investor Coatue Management. 

Avendus was the financial advisor to Swiggy on the transaction.