Industry

Start-up Swiggy gets $1 bn fresh funds

Locked and loaded: The current round of funding is the largest in India’s food technology sector till date.

Locked and loaded: The current round of funding is the largest in India’s food technology sector till date.   | Photo Credit: M. Karunakaran

Food delivery company to use the money to bring more quality food brands closer to consumers

Food delivery start-up Swiggy said it had raised $1 billion in a funding round led by existing investor Naspers, a South African conglomerate.

New investors Tencent, a Chinese technology giant, Hillhouse Capital and Wellington Management Company, along with existing investors such as DST Global, Meituan Dianping and Coatue Management, participated in the round.

The round, the single largest in India’s food technology sector to date, would help Swiggy bring more quality food brands closer to consumers and address gaps in supply through delivery-only kitchens.

“As we add more firepower to our vision of elevating the quality of life for urban consumers by offering unparalleled convenience, we’re pleased that visionary global investors share our purpose,” said Sriharsha Majety, CEO, Swiggy.

The online food ordering and delivery market is expected to grow at a compounded annual growth rate of more than 45% to reach $11 billion in gross merchandise value [GMV] by 2023, according to RedSeer Consulting, a research and advisory firm. Inclusive of the latest round, Swiggy has raised a total of $1.26 billion.

Intense competition

The funding would help it to compete with rivals such as Zomato, Uber Eats and Ola-owned Foodpanda, which are also betting big on the online food ordering and delivery market in the country. Zomato had raised a total of $653.8 million in 11 rounds, according to Crunchbase.

“All these four players have deep-pocketed investors. [But] in this market, these players would have to really differentiate themselves to be able to really compete, and not just on discounting,” said Rohan Agarwal, engagement manager, RedSeer Consulting. “The competition intensity is very high...definitely customer acquisition and retention is something that requires a good amount of investment.”

He said the online food delivery industry was one of the “fastest growing” spaces in the Internet sector in the country. Last year, it crossed $750 million in GMV and this year, it is expected to reach $1.7 billion, according to Mr. Agarwal.

Larry Illg, CEO, food and ventures, Naspers, said that the firm first partnered with Swiggy in April 2017 because ofi its sustainable, long-term business that stood out amongst others in India.

“Now, we have even more confidence that Swiggy has the winning formula,” Mr. Illg said. Since the last funding round six months ago, Swiggy said it had expanded to 42 additional cities and doubled GMV.

The company has close to 1.20 lakh active delivery partners. The firm said it would also use the capital to hire top-notch talent, especially for machine learning and engineering roles. Swiggy said it would also further strengthen its technology backbone and focus on building a next-generation artificial intelligence-driven platform for hyperlocal discovery and on-demand delivery.

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Printable version | Mar 29, 2020 4:02:59 PM | https://www.thehindu.com/business/Industry/start-up-swiggy-gets-1-bn-fresh-funds/article25791635.ece

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