Foodtech Unicorns Zomato, Swiggy Race For The Biggest Fundings: Report

As the foodtech war between the unicorn players continue to grow intense with each passing day, giants, Swiggy and Zomato are in talks to raise fresh funding for providing discounts to their users.

Citing unnamed sources, an ET report said that  Bengaluru-based foodtech platform Swiggy is in talks to raise $500-600 Mn in a round led by existing investor Naspers along with the participation of new investors like Google with an aim to boost the company’s valuation to over $4 Bn.

While Google and other strategic investors and hedge funds, are in talks to invest $40-50 Mn each, the maximum funding is expected to be made by South African media giant Naspers. The South African company had first led Swiggy’s $1 Bn Series H round in December 2018.

Meanwhile, rival Zomato is looking to raise $600-700 Mn and is seeking a valuation of over $3.1 Bn. The report added that Goldman Sachs is running the mandate for this round.

The potential investors will get to evaluate both the companies against each other as both Zomato and Swiggy are out in the market at the same time, they added.

Swiggy is currently the fifth highest-valued company in the Indian startup ecosystem with a valuation of $3.3 Bn. Zomato, on the other hand, stands at $2.6 Bn.

The fundraising comes at a time when both the companies are losing nearly $30-50 Mn per month due to huge discounts and incentives and also expansion into new cities, the sources said.

This speculation comes right after it was reported that Japanese conglomerate SoftBank is looking to invest $300 Mn – $500 Mn in Swiggy.

Recently, Swiggy also launched the Swiggy Daily subscription service in Gurgaon and with plans to expand it to NCR and other cities soon. The service will allow users to order a single affordable meal or subscribe to a three-day, seven-day, 30-day plans, priced at INR 50 – INR 150 per meal. The users will also get 20% off on Swiggy Daily orders for the first month.

Through this model, the company will focus on homestyle food in Indian cuisines ranging from Gujarati, Rajasthani, Tamil, Punjabi and more. In the coming months, it will also add snacks, beverages and fruits to the daily menu.

In order to stay ahead in the game, Zomato is also stepping up its efforts to popularise its service among more people. Recently it said that it has expanded its services to 300 cities, serving over 250 Mn users in these cities. It also launched the Zomato Lite app, which is targetted at users in Tier 2 and 3 cities as well as rural India.

The competition in the foodtech business has also stepped up after cab hailing giants Ola and Uber forayed into the space. In February, it was speculated that UberEats maybe in talks with Swiggy to divest its business by taking 10% stake of the foodtech unicorn.  

Meanwhile, Ola-owned food delivery business Foodpanda is exploring different business plans to strengthen its position in the market. Ola which plans to reduce cash burn in the food segment has been focusing more on in-house brands and cloud kitchens— The Khichdi Experiment, FLRT and HolaChef.

According to a RedSeer FoodTech Leadership Index (FLI) ranked Swiggy at the top place with a total score of 96 in the fourth quarter of 2018. Its arch-rival Zomato came in second with a score of 82. UberEats stood at the third place followed by Ola’s Foodpanda.

According to a report by Netscribes, the online food delivery market in India is expected to grow by 34-36% from 2015 to 2020.