While almost the entire Indian food delivery segment continues to struggle due to shortage of capital and an adequate business model, Swiggy on the other hand seems to be climbing the ladder. And fresh documents filed with Registrar of Companies by the startup prove that point.
According to these docs, first researched by ET, Swiggy has raised another $7 Million from its existing investors. In this new round, the company’s existing investors — Norwest Venture Partners, DST Global and Accel Partners have poured in money. In the midst of valuation markdowns, Swiggy’s valuation has increased as the company raised this funding round at a valuation of $130 million.
The newly raised money will be used to further establish its presence in the eight major cities in which the company is already present — a strategy which has worked well for Swiggy and is in stark contrast from the rapid expansion which other heavily backed ones tried to do.
Commenting about this new funding round, Nandan Reddy, cofounder of Swiggy, told ET:
As the market leader, our goal is now to create defensibility around the brand with superior experience for both customers and restaurants. We charge our partner restaurants for both lead generation as well as delivery at 25% of the overall order.
The company claims to be fulfilling close to 40,000 orders from the eight cities that it operates in including Bengaluru, Hyderabad and Delhi-NCR. It has also seen its order value basket size increase to Rs. 375 per order.
Commenting about the revenue generation of Swiggy, Mukul Arora, principal at SAIF Partners, said:
A restaurant will pay Swiggy a commission for bringing the order, just like it pays other marketplaces, and in addition, it will pay Swiggy for delivery. Therefore, Swiggy’s revenue per order is significantly higher than other marketplaces, which focus on only one of the two aspects.
Swiggy, on-demand food delivery platform, was founded in August 2014 by Sriharsha Majety, Nandan Reddy and Rahul Jaimini. As of now, the company has raised $53.5 million in four funding rounds.
Recently, in a first of its kind move, the company introduced surge pricing for orders placed on holidays, festivals and rainy days when fewer delivery staff are available. Prior to that, it increased the minimum order value for free delivery from Rs.150 to Rs.250, with a delivery fee of Rs.30 in order to cut losses and build a viable business model.
Some reports suggests that the company is also planning to set up kitchens jointly with restaurants as it looks for higher revenues. The kitchens will function as production units without dine-in facilities and cater to demand generated on Swiggy.
This fresh round for the company comes at a time when Zomato’s valuation has been thrashed to $500 million by HSBC, almost half of its previous valuation. This fresh capital will provide Swiggy with a much needed boost, something which becomes essential when you are competing against the likes of Zomato, TinOwl+Roadrunnr, Foodpanda among others.