Bengaluru-based food-tech platform Swiggy announced on Monday a $700 million investment from marquee investors, almost doubling its valuation to $10.7 billion.
On the other hand, the market capitalisation of Swiggy’s rival Zomato has plummeted in the last few trading sessions to close at $9.6 billion on Monday.
So clearly, Swiggy’s valuation has surpassed that of its main rival Zomato which went public last July. With this, Swiggy has turned a decacorn, a term that refers to startups valued at more than $10 billion.
Startups that have attained this status include Flipkart, BYJU’s, Paytm and OYO.
The gross order value of the company’s core food-delivery business has nearly doubled in the last year, Swiggy said, adding the latest fundraise will allow it to accelerate growth on its core platform of food delivery segment in addition to making investments in Instamart.
Instamart is Swiggy’s quick commerce grocery service, which is set to reach an annualised gross merchandise value (GMV) run rate of $1 billion in the next three quarters.
Swiggy recently said that it plans to invest $700 million in Instamart, which took just 17 months to hit the same level of GMV that Swiggy’s food delivery business achieved in 40 months.
With hyper-local delivery becoming all the rage, Swiggy is sharpening its focus on Instamart which has expanded to 19 cities in the past few months.
However, quick grocery delivery is a capital intensive business and companies in India have only started to build out the infrastructure to cater to the large population.
That is why the new round of funding came just six months after it raised a mammoth $1.25 billion last July, underscoring the capital required to expand its grocery delivery business.
Behind the fast grocery delivery of these companies are dark stores. A dark store typically caters to a radius of 2-km and the likes of Dunzo, Instamart, Blinkit and Zepto currently have 20-30 such micro-fulfilment centres in the top 10 cities where their 10-20-minute delivery services are operational.
Swiggy has gone beyond grocery with Genie, its pickup and drop service that is now present across 68 cities while its meat delivery service and daily grocery service Supr Daily is present across all major Indian cities.
While startups are eager to jump on the quick commerce bandwagon in search of the next big market opportunity, the category is yet to prove its sustainability in the long term.