Swiggy secures $100M from Naspers, Meituan Dianping

India’s food technology ecosystem is piping hot once again as investors rush to grab a piece of this pie.
 
South African media giant Naspers has led an investment of $100 million in food delivery firm Swiggy along with new investor Meituan Dianping, which is backed by Tencent. The round finally puts a close to months of negotiations which also saw SoftBank and Flipkart trying to woo the online food-delivery platform.
 
The deal is likely to have valued the four-year-old venture at about $600-650 million before the investment, according to people aware of the deal financials.
 
Swiggy was last valued at $400 million when Naspers led an $80-million investment in May last year. Naspers holds 33% in Tencent which is the lead investor in online to offline services firm Meituan-Dianping, that has emerged as the new investor for Swiggy in this round.
 
ET had reported in its edition dated January 4th that Naspers was in advanced talks to lead a $150-200 million investment round in Swiggy.
 
With this, the total amount raised by the Bengaluru-based food delivery platform stands at $255.5 million and comes one week after competitor Zomato raised $200 million from Ant Financial.
 
A large part of the capital raised in this round will be utilised towards Swiggy’s long-term strategy of building products and services around plugging supply gaps in the marketplace and will see the firm invest in its New Supply business line.
 
Swiggy had launched its cloud kitchen model Swiggy Access in November, whereby it brings delivery-only branches for partner restaurants to new localities in various cities. The firm is now looking to expand that business line this year.
 
“With this funding, we will further invest in building differentiated offerings, plugging the white spaces in the ecosystem, and developing our technology while keeping superlative customer experience at the core,” said Sriharsha Majety, CEO, Swiggy.
 
Swiggy, the winner of the ET Startup Awards 2017, leads the domestic online food-delivery market by volume, handling more than 140,000 orders a day in India. Zomato handles about 100,000 orders a day in India and the UAE.
 
“Swiggy has continued strong growth through 2017 and now has a clear lead in the market,” said Larry Illg, CEO, Naspers Ventures in a statement.
 
“The company’s performance is all the more impressive given the intense competition we see in the food ordering and delivery business in India. Swiggy has shown it has the ability to rise above the competition and create long-term relationships with its users,” Illg added.
 
While Swiggy is well-capitalised, Ola's recent acquisition of Foodpanda India forced the company and its investors to go back to the drawing board, to chart a winning strategy in a market that is increasingly becoming a 5-way battle between Zomato, Swiggy, Foodpanda, UberEATS and Google Areo.
 
At about 30,000 orders fulfilled per day, Foodpanda is a distant third in the Indian food-delivery market, followed by UberEATS and Google Areo, both of which have been steadily increasing customer discounts while reducing restaurant commissions in a bid to make their platforms more attractive.
 
The last 12-18 months marked a period of clean-up for food aggregators, with significant growth in revenues buoyed by a swell in order volumes, thus stoking investor interest in the sector once again.
 
Swiggy, owned and operated by Bundl Technologies, grew the fastest in terms of revenue in the fiscal year 2016-17, growing revenue by six times even as losses increased by 50% to Rs 205 crore. The company has said that the expansion in losses was congruent with a four-fold increase in order volumes in FY17 even as it managed a 35% reduction in delivery costs.
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