Food aggregation and delivery platform Swiggy has just raised a sum of $1.25 billion through a recently closed, two-tranche financial round. The end of the fundraiser saw the startup rise to a massive valuation of nearly $5.5 billion.
One tranche of the latest financial round, which has also become the largest fundraise by Swiggy till date, was led by many new investors, from Falcon Edge and Goldman Sachs, to Carmignac, Think Investments and Amansa Capital. This part of the fundraiser brought in around $800 million. The remaining $450 million came in from investment by giant SoftBank Vision Fund II. Existing investors Prosus, Wellington Management, and Accel Partners, also participated in the same.
The news was broken to employees through an internal mail by founder Sriharsha Majety. While the fundraiser is already a great step in itself, it assumes greater importance considering how competitor Zomato has raised a sum of more than $1 billion through investments by industry leaders like Tiger Global and Kora Management, in the past year. Zomato’s IPO, which came later, is well documented already.
Majety, who now serves as the CEO at Swiggy, has expressed optimism over the future of his firm, saying, “The scope of food delivery in India is massive and over the next few years, we will continue to invest aggressively into growing this category.” The funding will be put into expanding the company’s online business, chiefly in the grocery domain. Inorganic growth will also be facilitated through M&A deals.
Swiggy has been trying to diversify its revenue sources, not only to become different than Zomato, but to also make sure that it does not rely completely on the cut throat market on food delivery in India. This is because the average food order value in India is quite low, which makes it difficult for companies like Swiggy and Zomato to reach the status of profitability. Over the last year, the company has introduced new features like Swiggy Genie and Instamart (available in Bengaluru and Gurugram).
This has attracted the attention of investors, which is how Swiggy has been able to raise these massive funds despite Zomato’s massively successful IPO.
And while we are at it, , Zomato, which is currently in the middle of its maiden initial public offering (IPO), saw $46.3 billion coming in offers recently, while also noting an oversubscription of an impressive 38 times, as of Friday. The share allotment will, in all likeliness, be announced by Thursday, in what has been dubbed to be the third-largest IPO that India has ever seen. Latest details say that unlisted shares are currently commanding premiums of ₹16.75-17.25 in the grey market, up from their previous value of ₹10.
