Baron Capital Further Cuts Swiggy’s Valuation To $6.5 Bn

Food delivery decacorn Swiggy can’t seem to catch a break as the US-based Baron Capital has now cut the startup’s fair value to $6.5 Bn as of March 31, 2023.

This is the second time in the last few months that Baron has slashed the valuation of Swiggy. Earlier, the US-based firm marked down Swiggy’s fair value by 34% to $7.3 Bn as of December 31, 2022.

The VC firm’s filings with the US Securities and Exchange Commission (SEC) showed that the latest fair value put by it on its stake in Swiggy was $45.76 Mn as of March 31, 2023.

Extrapolating from Baron’s 0.7% stake in the foodtech gives a valuation of $6.54 Bn.

As per the SEC filings, Baron had invested $76.8 Mn for 11,578 shares in Swiggy, valuing the foodtech at $10.96 Bn. At Friday’s (May 26) exchange rates, Swiggy’s implied valuation by Baron Capital is now under Zomato’s market cap of $6.84 Bn.

However, at its peak, Zomato hit a market cap of $15.5 Bn, far higher than Swiggy’s highest private equity valuation of $10.7 Bn.

Of late, a number of investors have cut Swiggy’s valuation amid the global rout in valuations of tech companies. Earlier, Invesco trimmed Swiggy’s valuation twice, taking it from $10.7 Bn to $8 Bn in April and then to $5.5 Bn.

Invesco was the lead investor during Swiggy’s last funding round worth $700 Mn.

Earlier this month, Swiggy claimed that its food delivery vertical hit profitability as of March 2023. While the startup is yet to release its financial statements for FY23, its rival Zomato also claimed that its business, excluding the quick commerce vertical, turned adjusted EBITDA positive in Q4 FY23.

Swiggy has been aggressively slashing its costs to achieve profitability. As part of the cost-cutting measures, it fired 380 employees earlier this year, while it also shut business verticals which did not find proper product-market fit, including Handpicked.

While Swiggy continues to be challenged by Zomato and government’s Open Network for Digital Commerce (ONDC), the valuation hits are part of a larger trend of erosion in valuation of technology companies worldwide.

Many Indian startups have recently seen their investors cut their valuations. For instance, edtech decacorn BYJU’S saw its valuation reduced by 50% by BlackRock.

Further, epharmacy unicorn PharmEasy saw two valuation cuts recently – by Janus Henderson (50% reduction) and Neuberger Berman (a 21% decline). The latter also slashed Pine Labs’ valuation by 38% to $3.1 Bn last week. Vanguard reduced ride-hailing startup Ola’s valuation by 35% to $4.8 Bn earlier this month.

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