Online food delivery platform, Swiggy has closed a fresh $800-million funding round backed by new and existing investors, co-founder and chief executive officer Sriharsha Majety said in an internal mail to employees on Monday.
Online food delivery platform, Swiggy has closed a fresh $800-million funding round backed by new and existing investors, co-founder and chief executive officer Sriharsha Majety said in an internal mail to employees on Monday. The investment values the company at about $5 billion, a source aware of the development said. While many of the food tech firm’s existing investors, including Prosus and Accel, participated in the financial round, as many as five new investors — Falcon Edge Capital, Amansa Capital, Think Investments, Carmignac and Goldman Sachs — came on board.
The CEO said the fundraise was heavily oversubscribed given the positive investor sentiment towards Swiggy. Swiggy had raised about $156 million in two tranches last year. The online food delivery firm had garnered a whopping $1 billion in funding from a clutch of investors in December 2018 at an estimated valuation of $3.3 billion. So far, investors have infused over $2 billion in the Bengaluru-based firm.
“This fundraise 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 new offerings for the future that may be ready for investment later. We will just need to now relentlessly invest and execute over the next few years to build an enduring iconic company out of India. The next 10-15 years offer a once-in-a-lifetime opportunity for companies like Swiggy as the Indian middle class expands and our target segment for convenience grows to 500 million users over this period,” Majety said in the mail.
Food delivery companies Swiggy and Zomato saw demand for their delivery services rise manifold amid the pandemic as home-bound consumers took to online ordering of food. Many people explored the concept which otherwise was largely subscribed by corporates and millennials.
“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. In addition, some of our new bets like Instamart are showing amazing promise…overall, between the offerings that are scaling fast now and the pipeline we have, our vision for unparalleled convenience will come to life in a very big way over the next few quarters,” Majety said.
Analysts at Kotak Institutional Equities estimates the online food delivery industry gross merchandise value (GMV) to increase to $9 billion in FY25 and further to $27 billion by FY30 from a projected $3 billion in FY20 on the back of the Covid-led growth. The segment that has about 15 million transacting users at present and is expected to widen its customer base to as many as 80 million going ahead. “The immediate opportunity for food delivery companies is the 110-120 million online shopper base; these customers are already aware of transacting online, making online payments,” the analysts said.
Rival Zomato that is gearing up for an IPO raised a fresh $250-million in funding from a clutch of investors led by Kora Management at a post-money valuation of $5.4 billion in February. The company closed a $660-million financial round backed by 10 new investors at a post-money valuation of $3.9 billion last year.