Swiggy valuation tops $5.5 bn after raising $1.25 bn from SoftBank, Prosus

The fundraise will give Swiggy enough firepower to take on rivals such as Zomato, Amazon, Dunzo and Ola Foods

Food delivery major Swiggy has closed a $1.25-billion fundraise, marking the first investment in the category by SoftBank Vision Fund 2. This takes the valuation of the Bengaluru-based startup up by more than 50 per cent to $5.5 billion from $3.6 billion earlier, according to industry sources.   

Swiggy’s long-term investor Prosus has also participated in the current round along with others such as Accel Partners and Wellington Management. In addition, it has attracted new investors Qatar Investment Authority, Falcon Edge Capital, Amansa Capital, Goldman Sachs, Think Investments and Carmignac.

This fundraise is expected to give enough firepower to Swiggy to counter competition from rivals Zomato, Amazon, Dunzo and Ola Foods among others. Zomato is raising $1.26 billion in its initial public offering. It was seeking a $8-billion valuation. In February, Zomato’s valuation crossed $5.4 billion after it raised $250 million in primary funding from existing and new investors.

Food services is a $65-billion market opportunity in India, according to research firm RedSeer, growing at 9 per cent per annum and likely to reach $110 billion by 2025. Within the food services market of $65 billion, online delivery forms only a small subset at a market size of $4.2 billion (6-7 per cent). Analysts expect the food delivery market to be worth $12 billion by 2022.

The new investment is meant to accelerate Swiggy’s multi-year strategy of growing its core food delivery business and building new food and non-food segments. To support this, the company will enhance its capabilities in technology and AI, and strengthen teams across engineering, product, data science and analytics as well as in business and supply chain for its newer initiatives.

“The participation of some of the most visionary global investors is a huge vote of confidence in Swiggy’s mission and ability to build an enduring and iconic company out of India,” said Sriharsha Majety, CEO, Swiggy. “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. Our biggest investments will be in our non-food businesses that have witnessed tremendous consumer love and growth in a short span, especially in the past 15 months of the pandemic.”

The latest fundraise showed strong interest from investors, coming on the back of Swiggy’s recovery from the impact of Covid-19 and subsequent growth in 2020-21. The order value is 130 per cent of pre-Covid for the food category.

Munish Varma, managing partner, SoftBank Investment Advisers, said SoftBank has successfully backed multiple food delivery platforms globally and seen the value of providing high-quality convenience to consumers. He said Swiggy’s focus on evolving the consumer experience and its emphasis on relationships with its delivery partners and restaurants had made it a household brand in India.

Majety said he believes the next 10-15 years would offer a once-in-a-lifetime opportunity for companies like Swiggy as the Indian middle class expands and the firm’s target segment for convenience grows to 500 million users.

Before starting Swiggy, Majety quit his job as a banker at Nomura, Japan's largest investment bank, and went on a backpacking trip by bicycle to Portugal, Spain, France, Italy and Greece, peddling 3,200 km. After returning, he founded a logistics platform for online retailers, which he had to shut down. An alumnus of Birla Institute of Technology & Science Pilani, Majety launched Swiggy in Bengaluru's Koramangala neighbourhood along with his college mate Nandan Reddy and IIT Kharagpur graduate Rahul Jaimini in 2014.