Foodtech unicorn Swiggy is reportedly raising $200Mn funding from Carlyle Group, an American private equity fund who had also invested in the logistics startup Delhivery.
This investment is expected to increase the company’s valuation to $4.5 Bn from the earlier $3.3 Bn in December, according to a LiveMint report. However, in response to an Inc42 query, Swiggy denied to comment on the report.
Earlier this month, Japanese investor SoftBank was also reported to be eyeing an investment of around $300 Mn – $500 Mn in the foodtech company. Later, another report has claimed that Swiggy might be raising a $500 – 600 Mn funding round from its existing investor Naspers along with the participation of new investors like Google.
According to Swiggy, till now it has raised a total of $1.26 Bn in funding. Some of the existing investors in the company include Naspers, DST Global, Meituan-Dianping, Accel Partners and Saif Partners.
Swiggy was founded by Sriharsha Majety, Nandan Reddy, and Rahul Jaimini in 2014. The company claims to have over 2 Lakh delivery partners and more than 1 Lakh restaurant partners spread across 200+ Indian cities.
The food delivery company had posted a 220% jump in its revenue for FY18. According to the company filings, accessed via business intelligence platform Tofler, the company had earned $63.77 Mn in revenue, of which its operational income was $60.22 Mn.
The company had posted an annual net loss of $54.12 Mn in 2017-18, which is a 93% increase in losses from FY17. Company’s advertising and promotional expenses have also increased to $21 Mn from $7.16 Mn the year before.
The company has been diversifying its revenue channels by reducing discounts and bringing in more repeat orders as well as entering new verticals such as Swiggy Pop, Swiggy Daily, Swiggy Super, Swiggy Stores. Earlier this year, the company had also invested $4.39 Mn in the Mumbai-based foodtech startup Fingerlix.
Food Delivery Market In India
According to a report by Netscribes, the online food delivery market in India is expected to grow annually by 34% to 36% from 2015 to 2020.
RedSeer’s June updates on the food delivery market have noted an increase in adoption of delivery services in non-metro Indian cities. Food deliveries in non-metro cities have grown 7x faster quarter-on-quarter as compared to metro cities (80% growth vs 12%). The report attributed this growth to a combination of smart promos, the growing selection of restaurants and increasing comfort with foodtech usage.
Earlier, RedSeer’s March updates had also noted an evolution of order use cases with more and more consumers using food delivery applications to order lunches, breakfasts and snacks, in addition to the usual dinner orders.
The updates noted that this increase in the number of use cases has lead to around 25% drop in average order values in 2018. The average order values are further expected to go down to INR 250 in the next five years. However, overall this increase in use cases has lead to greater customer engagement for businesses and hence, much larger market.