The South African Internet Group, Naspers, has emerged as a prime candidate to lead a $150-$200 million investment in one of the top food delivery startups in the country, Swiggy. This news comes after the Japanese conglomerate Softbank and Indian e-commerce giant, Flipkart, ended independent funding discussions with Swiggy, as per people familiar with the matter.
The investment might give the three year old startup a valuation somewhere between $600-650 million. Swiggy most last funding round was held in May 2017, when the company raised $80 million from Naspers during the Series E round. The investment had given the startup as valuation of $400 million.
Flipkart’s negotiation to invest in Swiggy ended when Flipkart insisted that its payment platform PhonePe should be the sole payments platform on Swiggy’s, which the latter refused. Swiggy currently offers both Mobikwik and Paytm as digital payments options. On the other hand, Softbank’s talks to invest in Swiggy’s ended soon and thereafter the Japanese giant announced its intentions of investing $9 billion in Uber instead. The deal would give Softbank a direct entry into the Indian food delivery market through the ride hailing firm’s delivery startup, UberEats.
Apart from these there were even reports that Alibaba, the Chinese e-commerce giant and its payment affiliate Ant Financial were nudging the two industry leaders, Swiggy and Zomato, towards a merger and expressed interest in investing in such a combined entity. However the plans met a deadlock due to valuation differences.
Swiggy is operated by Bundl Technologies and showed the most growth in terms of revenue in the financial year 2016-17. Its revenue grew six times while the losses rose by 50% to Rs 205 crore. The company has stated that the rise in loses was in agreement with a fourfold rise in the number of orders in FY 2017 while the company managed to reduce delivery costs by 35%. The start-up so far has raised approximately $155 million in equity funding and $8 million in debt, bringing the total to approximately $163 million and therefore stands second to Info-Edge backed Zomato, which has raised $255 million in funding. Together, Zomato and Swiggy control about 80% of the online on demand food delivery market in the country.
So while, Swiggy has been well-capitalised, it was Ola’s acquisition of FoodPanda which has lead the company to start looking for funding once again. In the past one- one and a half year, there has been significant growth in the food delivery market both in terms of revenue and a rise in the number of orders, which has lead to a renewed investor interest in the sector.
As per the report from the Economic Times, for the current funding round , Naspers may join hands with China – based Tencent Holdings , which is would then become a new investor in Swiggy. The two companies have a history of occasionally partnering up for investments and at times following each other’s investments across various segments.
(Picture courtesy: techstory.in)