Leading online food ordering and delivery company Swiggy has raised $80 million — its largest ever tranche of funds — in a series E round led by South Africa based internet and entertainment group Naspers. With this Swiggy has now raised $155 million in all. Other existing investors who participated in the funding include Accel India, SAIF Partners India, Bessemer Venture Partners, Harmony Partners and Norwest Venture Partners. According to Swiggy, the funds will be used to introduce a suite of new product and service offerings and also to double the technology headcount. The company will also increase investments across core engineering, automation and data science.
Swiggy competes with Zomato and Foodpanda. Zomato which was largely into restaurant listing business has forayed into food delivery and has cumulatively raised about $224 million. Swiggy, which was set up three years ago, reported a loss of Rs 137.18 crore in FY16 compared with a loss of Rs 2.12 crore in FY15. Revenues, however, more than doubled to Rs 23.59 crore in FY16 from Rs 11.59 lakh in FY15. Swiggy is present across eight locations in India – Delhi-NCR, Mumbai, Pune, Hyderabad, Kolkata, Bengaluru and Chennai.
Commenting on the investment, Swiggy co-founder and CEO Sriharsha Majety said, “As the market leader, we are leveraging our deep understanding of the Indian consumer and the gaps in the market to introduce disruptive and highly differentiated service offerings; making online food ordering and delivery more seamless and reliable to users everywhere.”
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Naspers said it was attracted to the company’s “exceptional execution” in disrupting online food ordering and delivery in India while many players are struggling. According to research firm Redseer Consulting, India’s online food delivery market has seen a rapid growth in the order volumes coupled with higher seller satisfaction while the reduction in delivery cost improved the overall unit economics of the sector. The online food delivery market saw an increase in daily orders by 32% for the first quarter of 2017 as compared with the fourth quarter of 2016 while the average order value declined marginally.
“We believe this has been due to the rise of new users in the platforms. Which has resulted in the reduction in repeat usage and number of orders per customer,” it said. The online food delivery company also underwent certain challenging times with the slowdown in funding. Start-ups such as Dazo and Eatlo have shut shop while online grocery delivery company Grofers acquired Spoonjoy.