Ever since India imposed a nationwide lockdown, e-commerce companies have found it hard to go about their business. Although the government cleared the way for delivery of essential items as well as allowing for normal functioning of food and grocery delivery platforms, the number of orders has still dropped about 60-70%. But a handicap at the front-end of the business hasn’t apparently affected events at the back.
Swiggy, one of the two remaining major players in India’s food delivery space, has raised fresh capital of $43 Million backed by existing investors as well as a couple of new entries. The round, which came to the fore via company’s regulatory filings (via Paper.vc), was led by existing investor Tencent and new players Ark Impact, Korea investment partners, Samsung Ventures and Mirae Asset Capital Markets.
The investment is a part of Swiggy’s ongoing Series I round. The company had earlier raised $113 Million in early February, led by South African internet giant Naspers along with Hadley Harbour Master Investments and Chinese local services platform Meutuan. That raise, along with the current $43 million round, has put the total capital raised in the ongoing round at $156 Million and values the food-delivery startup at $3.6 Billion.
Speaking on the occasion, Rahul Bothra, CFO at Swiggy, said in a statement, “the company has built a sustainable food delivery business over the years while solving various customer pain points. As we continue to strengthen and expand our services that offer unparalleled convenience to our consumers, we are humbled by the faith shown by our investors year-on-year and welcome the new investors on board. Our focus remains to execute on our vision while building a sustainable path to profitability.”
A funding round in times like these signals at a possible expansion of business verticals by the company. Swiggy, which operates in over 500 cities in India, recently announced expansion into the grocery delivery sector. The ongoing coronavirus lockdown in India has further provided an impetus to companies to look for newer business models to tackle the catastrophic economic impacts that are yet to come. And this has led to Swiggy expanding its grocery delivery service at an even aggressive pace, since the government has listed grocery under ‘essential services’, along with ecommerce.
Food delivery, and in fact the entire restaurant industry as such, is in dire straits. And experts suggest, that even if the lockdown does get lifted, a slew of small eating joints will be looking at a complete shutdown. President of the NRAI (National Restaurants Association of India), had recently said that 40-50% of restaurants have been hit and smaller establishments might shut shop permanently owing to mounting fixed costs. Amid such a scenario, it makes sense for the likes of Swiggy and Zomato to quickly pivot and branch out into newer verticals.
The latest investment further heats up the battle for a stronghold on the $4.2 Billion online food-delivery market in India, which has turned into a two-horse race between Zomato and Swiggy after the exit of Uber Eats from the scene. Zomato, apart from its recent acquisition of Uber Eats, has also been gulping in fresh investments of its own, with a $150 Million capital influx from Ant Financials in January this year.