Food delivery firm Swiggy is in the process to close a $800-million funding round, with Falcon Edge Capital, Amansa Capital, Think Investments, Carmignac, and Goldman Sachs joining as new investors. This round will take the company's valuation close to $5 billion from $3.6 billion, said sources in the know.
Existing investors Prosus and Accel will also be participating in the Series J round, Swiggy co-founder and Chief Executive Officer (CEO) Sriharsha Majety said in an emailed letter to employees. The fundraising was heavily oversubscribed given the positive investor sentiment towards Swiggy, said Majety in the letter.
Business Standard had in February reported that the foodtech major was in talks with new and existing investors to raise about $1 billion at a $5 billion valuation.
“The food delivery business is the strongest it's ever been, and we are now well on our way to drive continued growth over the next decade,” said Majety in the letter. “In addition, some of our new bets like Instamart are showing amazing promise while we have also made strides in setting up some of our other adjacencies for lift-off very soon,” Majety said.
Swiggy Instamart allows customers to order essentials and groceries through the day in under 30-45 minutes. Its other service Genie allows consumers to either buy anything from any store and have the same delivered, or provide pickup and drop services to and from any location within the city.
The fundraising comes at a time when rival Zomato is preparing for a $650-million IPO this month. It recently closed a $910-million round at a valuation of $5.4 billion. Swiggy has so far not expressed any plans to go public.
“This fundraise gives us a lot more firepower than the planned investment for our current business lines. Given our unfettered ambition though, we will continue to seed/experiment new offerings for the future that may be ready for investment later. We will just need to now relentlessly invent and execute over the next few years to build an enduring iconic company out of India," said Majety.
The next 10-15 years offer a once-in-a-lifetime opportunity for companies like Swiggy as the Indian middle class expands and its target segment for convenience grows to 500 million users over the period, he said.
Swiggy currently operates in over 500 cities and leverages technology, delivery network and learnings from over 1 billion delivered orders to continuously improve on-demand food delivery services. After initial hiccups following the lockdown, both Swiggy and Zomato are coming out of the pandemic's shadows and have touched pre-Covid level numbers in terms of orders.