Swiggy gets Rs 512 crore on its platter

South African Internet conglomerate Naspers has led a $80-million (Rs 512 crore) funding round in online food ordering and delivery platform Swiggy, marking the firm’s second large investment in the Indian food tech space within a month.

Earlier this month, Naspers invested $431 million in Delivery Hero, the German food ordering and delivery platform and Foodpanda’s parent. FoodPanda, which has a significant presence in India, said a part of that investment would be routed to it.

Naspers, which has backed big Indian e-commerce firms such as Flipkart and OLX in the past, is now apprentally looking to make a major presence in India’s food tech market. The investments signal an end to the hard times for the sector, which saw several players shut shop and downsize in the past 24 months.

“Naspers was attracted to the company’s exceptional execution in disrupting online food ordering and delivery in India while many players are struggling. Their ability to create a sustainable business, earning consumer trust through a reliable first-party delivery technology, positions them well for success,” said Ashutosh Sharma, head of investments at Naspers in India.

Swiggy said it would utilise the investment to grow its technology team and bring new product offerings in each of the eight cities it was already present in.

“Investments are going into building very strong data science and machine-learning capabilities. The applications of that will be primarily in increasing delivery efficiencies further by being able to predict demand, capacity better,” said Sriharsha Majety, co-founder and CEO of Swiggy. “Personalisation and deeper customer understanding will be another major area of focus.”

New products offering faster delivery for a slight increase in cost and a lower-cost offering that takes a hit on delivery times are the bets the firm is taking, Majety said. 

The company wanted to move away from the one-size-fits-all approach and its technology investments in personalisation would also help in this, Majety said.

Moreover, the investment would give Swiggy a two-year headroom, during which the company plans to roll out a diversified product line. This, along with improved delivery efficiency, will help make Swiggy profitable at operational level.

“Long term is how we like to look at things and with investors such as Naspers backing us we can make some very calculated bets. This gives us some amount of breathing room to do a lot more than we’ve done previously,” added Majety.

Last year, Swiggy grew its revenues by over six times, and with fresh investment, that pace could go up in the current year.

While Swiggy might have to compete with just Zomato and Foodpanda for now, global giants Google and Uber have shown interest to get into the space.

Start-ups look at profitability

• The South African firm had earlier invested in Delivery Hero, parent of Foodpanda
• Delivery Hero got $ 431 million earlier this month
• Food tech sector attracting investor interest again as start-ups look at profitability
• The sector was the worst hit in the meltdown last year and several start-ups shut due to unviable business model