Swiggy Raises $ 1.25 Billion Funding From SoftBank, Others To Push Non-Food Delivery

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Swiggy said it has raised $ 1.25 billion from SoftBank Vision Fund II as well as existing investors Prosus (formerly Naspers), Accel and Wellington Management, in the largest funding round for the delivery platform of food online since its launch in 2014.

The company is now valued at $ 5.5 billion after the fundraiser, people familiar with the details said.

The investment was made in two installments from the start of the year, with $ 800 million first coming from new investors like Qatar Investment Authority, Falcon Edge Capital, Amansa Capital and Goldman Sachs. The second tranche of $ 450 million was invested by SoftBank Vision Fund, as first reported by ET on April 15. The Indian Competition Commission (ICC) recently cleared SoftBank’s investment in Swiggy.

The massive investment round comes even as big rival Zomato closed its initial public offering, which was oversubscribed more than 38 times last week. Zomato is expected to be listed on the Indian stock exchanges in the coming days, becoming the first of a handful of national unicorns – startups valued at $ 1 billion or more – to mine the public markets.

However, Zomato’s IPO and the general narrative regarding the economics of pruning units and other financial metrics for mainstream internet startups going public will not change Swiggy’s strategy, the co-founder said. and CEO of the company.
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Speaking to ET on Tuesday, Sriharsha Majety said Swiggy will continue to be aggressive – not just with discounts on food delivery, but even for investments in non-food categories. “That was the plan and it will be the plan,” he said, adding that the company did not have a concrete timeline to go public at the moment. “Swiggy will remain private … Zomato’s listing does not change the strategy of the company.”

Calling the Zomato IPO “good public market validation of the category,” Majety said the next decade will be very important and his business “will need to invest in groceries, even if food delivery has been reduced. achieved a better unit economy and made progress. . ”

ET reported on July 6 of a renewed discount by both players.

Swiggy Instamart, Supr Daily in brief

Majety said the food delivery app will use the new capital to aggressively invest in non-food verticals, while exploring merger and acquisition opportunities and hiring tech talent.

The investments will be mainly focused on its hyperlocal delivery service of groceries and basic necessities Instamart, which is fully operational in Bengaluru and Gurugram and has been launched smoothly in Mumbai. The company also operates a separate subscription platform, SuprDaily, acquired in 2018, for morning delivery of essentials like milk and bread. In this category, Swiggy competes with BB Daily from BigBasket in addition to new entrants such as JioMart from Reliance which is piloting this service in some cities.

Up to 25% of Swiggy’s revenue now comes from non-food delivery activities, which Majety plans to continue to grow over the next five years.

ETtech

(Graphic: Rahul Awasthi / ETtech)

The last round is important with the arrival of the influential technology investor SoftBank. Importantly, this is the first major investor to back Swiggy after a three-year gap when Naspers first came on board. Japan’s SoftBank, led by Masayoshi Son, has been evaluating both Zomato and Swiggy for a few years, as we reported earlier (
Read ETtech Morning Dispatch from April 16, where we explained why SoftBank chose Swiggy over Zomato).

“We have always viewed Swiggy, not as a food delivery company, but as a player in last mile convenience and logistics with an unprecedented competitive advantage,” SoftBank Investment partner Sumer Juneja told ET. Advisers.

“Instamart, which is the biggest category after food delivery today in cities that have been active for more than six to nine months, has a unit economy that tracks better than same-scale food delivery,” Juneja said. . The cost of acquiring new customers for new delivery businesses will be much lower than it was when Swiggy started out as a single food delivery app.

Additionally, hyperlocal services like Instamart and Supr Daily rely on the existing fleet for food delivery, making the cost of serving these users relatively lower.

SwiggyETtech

“It’s still very early days if you look at the grocery space as a whole… I think there will be a lot of investment in that,” Majety said.

Swiggy, however, will focus on the urban market and not on value-based groceries or monthly inventory like BigBasket. ET reported in its July 19 issue that BigBasket, now part of the Tata Group, planned to bring back express deliveries – typically done within an hour – after years of experience.

Other competitors in this category include Grofers, which has raised $ 120 million from Zomato and Tiger Global and JioMart from Reliance Industries, which is increasing the stake on its new business venture.

Food delivery versus NRAI

In recent weeks, the National Restaurant Association of India (NRAI) has filed a complaint with India’s anti-monopoly watchdog, alleging that food delivery platforms Zomato and Swiggy charge exorbitant commissions forcing restaurants to grant premiums. discounts. ET reported last week that Swiggy is piloting a Swiggy Direct ordering product in a move that is seen as calming the restaurant industry. “We have always spoken to partner restaurants and will continue to talk to them about the issues and what we can do. We are committed to them and Swiggy Direct is a pilot in one of those directions, ”said Majety, adding that the company had not received a formal notice from CCI regarding the NRAI complaint.

Swiggy Direct is part of a set of initiatives planned by the company. Majety said ideas like Order Direct had already been tried in 2014-15, but acceptance among restaurants has increased over the past year. “We have thought about this in the past as well, but we have not been able to find community acceptance of these direct ordering solutions. I guess the importance of delivery itself has taken a huge leap forward over the past year or so. Restaurants are now marketing themselves and receiving more orders directly.

Swiggy’s big fundraiser ended amid changes in her leadership team. Last month, the company elevated Phani Kishan to the position of co-founder. It was against the backdrop of his COO Vivek Sunder announcing he would be leaving Swiggy. Sunder had played a key role in expanding Swiggy to over 500 cities. “He (Sunder) has played a huge role in improving the unity economy that we have been able to achieve over the past 18 to 24 months. I will oversee this role while we look for a replacement, ”he said.


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