It took SoftBank several years, but the Japanese investment giant is now ready to bet on the Indian food delivery market. Swiggy announced on Tuesday that it has closed a $ 1.25 billion funding round led by SoftBank Vision Fund 2 and Prosus Ventures.
The new funding round, a Series J, includes the $ 800 million investment that the Bangalore-based startup disclosed to employees earlier this year. (SoftBank alone invested $ 450 million in the new round.) The new round, which Swiggy says has been “largely oversubscribed,” gives the six-year-old food delivery startup a post-money valuation of $ 5.5 billion.
TechCrunch first reported on Swiggy’s engagement with SoftBank and the proposed valuation of $ 5.5 billion in mid-April. Qatar Investment Authority, Falcon Edge Capital, Amansa Capital, Goldman Sachs, Think Investments and Carmignac and existing investors Accel Partners and Wellington Management also participated in the new round.
Swiggy said the new funding round shows the turnaround it has shown in recent quarters. Like many other startups, Swiggy has been hit hard by the pandemic. The startup said its recent gamble to expand into grocery delivery and the pickup and drop-off service has paid off. The value of the orders he is currently processing is 30% higher than before Covid, he said.
“The participation of some of the world’s most visionary investors is a huge vote of confidence in Swiggy’s mission and ability to build a sustainable and iconic business out of India. The breadth of food delivery to India is huge and over the next few years we will continue to invest aggressively in the growth of this category, ”Sriharsha Majety, Managing Director of Swiggy, said in a statement.
“Our biggest investments will be in our non-food businesses which have seen tremendous consumer love and growth in a short period of time, especially in the last 15 months of the pandemic. I believe the next 10-15 years will provide a unique opportunity for companies like Swiggy as India’s middle class grows and our target segment for convenience reaches 500 million users.
The new investment comes at a time when Indian startups are raising record capital and a handful of mature companies are starting to explore public markets. Zomato, Swiggy’s main rival in India, raised $ 1.3 billion in its initial public offering last week and financial services startups Paytm and MobiKwik also filed for an initial public offering.
At stake is the Indian food delivery market, which analysts at Bernstein expect to be worth $ 12 billion by 2022, they wrote in a report to customers earlier this year.
A third player, Amazon, also entered the food delivery market in India last year, although its operations are still limited to parts of Bangalore. In a virtual conference ahead of the IPO last week, Zomato executives dismissed Amazon as a serious competitor for now. “There is no major impact on Amazon’s market share so far,” said the company’s chief financial officer.
For SoftBank, a staple of the Indian startup ecosystem, this is the first time that it has bet on a food delivery player. The Japanese conglomerate has supported Indian startups in several categories, including e-commerce (Flipkart, Snapdeal, Meesho, Lenskart, Firstcry), ridesharing (Uber and Ola) and edtech (Unacademy). SoftBank has invested in several food delivery startups around the world, including DoorDash and Uber Eats. Prosus Ventures, one of the early investors in Swiggy, has also supported several food delivery startups around the world.
“Since its inception, I have had the privilege of watching Swiggy implement its vision of becoming the leader in the convenience economy. The focus on consumer enjoyment, product innovation and ecosystem support has made Swiggy a compelling digital experience in India. They have the railways in place to allow multiple businesses to reach the new age consumer on a daily basis, and food delivery is just the beginning, ”said Sumer Juneja, partner at SoftBank Investment Advisers, in a statement. communicated.
Swiggy said it will deploy the fresh funds to accelerate its “multi-year strategy” of growing its core food delivery business and creating new food and non-food adjacencies this year and beyond.
Further reading: Swiggy starts pilots on a #OrderDirect (The CapTable) product.