Exclusive: Swiggy Arms Itself For Grocery Battle With Funding From Tencent

Bengaluru-based food delivery major Swiggy has raised INR 264 Cr in its Series I funding round led by Chinese internet giant Tencent. Ark Impact Investments, Korea Investment Partners, and MACM India Growth Fund also participated in the round.

According to the ministry of commerce affairs (MCA) filings accessed by Inc42, Tencent has invested INR 142.5 Cr and got 6034 preference shares. Ark Impact Investments invested INR 71 Cr and received 3015 preference shares and 2 equity shares.

While Korea Investment Partners invested INR 35.6 Cr, Swiggy also received INR 14.2 Cr from MACM. Swiggy has issued 1498 and 602 preference shares to Korea Investment Partners and MACM, respectively. Also, 10 equity shares were given to Korea Investment Partners while MACM received one equity share from Swiggy as part of the deal. The price per preference and equity for this deal was INR 2,36,120 and INR 2,36,129 respectively with a nominal value of INR 10.

This is the second funding round raised by the company since its massive $1 Bn round in December 2018 which was led by Naspers, along with China’s Tencent, Hillhouse Capital, and Wellington Management.

“Swiggy has built a sustainable food delivery business over the years while solving various customer pain points. As we continue to strengthen and expand our services, we are humbled by the faith shown by our investors year-on-year and welcome the new investors on board. Our focus remains to execute on our vision while building a sustainable path to profitability,” said Rahul Bothra, CFO, Swiggy.

Prior to the current funding round, Swiggy has raised $113 Mn as part of its Series I funding round in February 2020. The round was led by existing investor Prosus N.V. along with the participation of existing investors Chinese local services platform Meituan Dianping and Wellington Management Company.

In FY2019, Swiggy has noted a 5X hike in its losses, amounting to INR 2,363 Cr in the fiscal year 2019, ending March 31 from INR 397 Cr in FY 18. Also, the company had reported total revenue of INR 1292 Cr with a total expense of INR 3637.6 Cr.

Swiggy’s rival Zomato is also on a funding ride in 2020. The Gururgam-based company had raised INR 1142 Cr ($150 Mn) in January. It has also raised INR 38 Cr ($5 Mn) from Pacific Horizon Investment Trust.

Swiggy Joins Crowded Market

The funding has come at a time when Swiggy is expanding into grocery delivery in many cities to meet the higher demand due to the lockdown conditions. The company, in partnership with retail grocery stores, is now delivering groceries in most cities where it has operations.

In its earlier model, Swiggy delivered essentials and other daily-use items through Swiggy Stores and Swiggy Go. While Swiggy Stores was launched in February 2019, the company had launched Swiggy Go in September last year after acquiring hyperlocal delivery startup Supr Daily. At that time, BigBasket and Grofers were the leading the segment with likes of ecommerce majors such as Flipkart and Amazon strengthening their position.

However, the company had limited the operations of Swiggy Stores and Swiggy Go to select cities such as Bengaluru and Gurugram. With the recent funding, the company might expand Go and Stores to other cities too to consolidate its position in the grocery delivery segment dominated by likes of BigBasket and Grofers.

Plus, Swiggy’s food delivery rival Zomato has launched Zomato Market service to meet the high demands of essential items amid lockdown.

Additionally, companies like social commerce startup Meesho, UPI payments player BharatPe and ecommerce player Shopclues have also launched grocery delivery services on the platform. B2B grocery delivery platform Ninjacart has also started to deliver groceries to societies and apartment communities. Moreover, till the time lockdown is imposed in the country, cab-hailing company Uber is also delivering orders of BigBasket.