Food delivery platform Swiggy said it had raised $1.25 billion in funding, in a round led by SoftBank Vision Fund 2 and Prosus, as it wants to double down on its core business, make acquisitions and invest aggressively in its promising instant grocery delivery business Instamart, daily grocery delivery service Supr Daily and its pick up and drop service, Swiggy Genie.
While Swiggy did not comment on the valuation, Moneycontrol learns Swiggy is now valued at $5.5 billion.
“It is very exciting to have gotten the interest that we did as part of this round and have marquee investors like SoftBank. We had strong interest from internal investors like Prosus as well. For us it is a validation of the work we have been doing in food delivery and the huge opportunity that exists for Swiggy to go after over the next 10-15 years as we build on the beginnings we have made on convenience”, Swiggy co-founder and CEO Sriharsha Majety told Moneycontrol in a rare interview.
Swiggy had plans to use the funding in three-four ways
Majety said Swiggy had plans to use the funding in three-four ways. It will continue to invest to grow the food delivery category. But, the most significant part of its investments will be into growing its non-food bets like Instamart where it sees huge opportunities. It will also continue to invest in hiring for the best talent in technology, data science and will explore mergers & acquisitions.
“Definitely we will be allocating a good part of the fund raise to the M&A strategy. There are a lot of exciting companies getting built and we want to dig in and see how we can partner together to drive stronger growth,” Majety said.
Zomato’s much anticipated public listing comes at a time when the Indian startup ecosystem is witnessing a funding frenzy, with Indian startups raising $12.1 billion in the first six months of 2021, according to data from Venture Intelligence. Apart from Zomato, Policybazaar, Nykaa, and Delhivery are also firming up plans for a public listing, even as there is a buzz of Flipkart and Freshworks listing in the US.
The funding will give Swiggy firepower to compete against Zomato and stave off competition from Amazon, which launched its food delivery service, Amazon Food in May last year in parts of Bengaluru.
This also marks the first investment in the Indian food delivery category by SoftBank Vision Fund 2, which has been mulling an investment in Food delivery platform Swiggy and Zomato for years, to beef up its global food tech and on-demand delivery portfolio, which includes DoorDash, GoPuff and Grab.
SoftBank’s billionaire founder and CEO, Masayoshi Son, it is learnt, had calls with Zomato founder Deepinder Goyal and Sriharsha Majety in April, after which he finally decided to go with the latter, as Food delivery platform Swiggy built a more diversified business portfolio, leveraging its strengths in the on-demand space.
When asked about how he pitched to Masa, Majety said, “My pitch was about the company we were building, the opportunities we were going after. In terms of the company’s mission, categories we are going after, in terms of what Swiggy can do for our consumers with the capabilities we have built and the stickiness we have.”
Munish Varma, Managing Partner,SoftBank Investment Advisers, said, “We are excited to partner with Swiggy as they increase their service offerings and daily consumer touchpoints in the rapidly developing digital economy.”
Sumer Juneja, a Partner, SoftBank Investment Advisers, added: “From its early days, I have had the privilege to watch Swiggy execute on their vision to become the leader in the convenience economy. They have the railroads in place to empower multiple businesses to reach the new age consumer on a daily basis, and food delivery is just the beginning.”
Juneja, who currently leads investments for SoftBank in India used to be on the board of Swiggy a few years ago when he was with Norwest Venture Partners, one of Swiggy’s early investors.
Majety said the latest funding round was heavily oversubscribed following strong interest from investors and comes on the back of Swiggy’s rapid recovery from the shock of Covid19 and its subsequent growth.
While it started with food delivery 7 years ago, when it was founded in 2014, Swiggy is now a three-sided marketplace, building out Instamart and Genie, in addition to food delivery, even as it explores newer breakout categories like meat delivery.
Swiggy Genie competes with Dunzo, Flipkart, Amazon, and its online grocery service Instamart, where it’s up against players such as Flipkart, Amazon, Tata-owned BigBasket, JioMart, and Grofers, which counts SoftBank and Zomato as investors.
Swiggy has also expanded Swiggy Genie, to 65 cities and deepened the presence of its meat delivery service in key markets. It is also expanding, SuprDaily, its daily grocery delivery service, present across major Indian cities.