Swiggy Valuation Surpasses $10 Billion: Funding Talks

Swiggy Pursues New Funding Round

Swiggy, an Indian food delivery company, is reportedly negotiating a new financing round exceeding $500 million. This potential investment could elevate the company’s valuation to over $10 billion, according to two sources with knowledge of the discussions.

Invesco Leading Potential Investment

Invesco, headquartered in Atlanta, is currently in discussions to either lead or co-lead this new funding initiative for the Bangalore-based startup. Existing investors include SoftBank Vision Fund 2, Falcon Edge Capital, and Prosus Ventures.

It’s important to note that the details of this deal are still under negotiation and are subject to change. Swiggy declined to provide a comment regarding these talks on Monday. Initial reports concerning these fundraising discussions were first published by CapTable, an Indian news source.

Rapid Growth and Market Context

These new funding discussions occur less than three months after Swiggy successfully secured $1.25 billion in funding, achieving a post-money valuation of $5.5 billion. The successful public debut of Zomato, Swiggy’s primary competitor, on Indian stock exchanges earlier this year has encouraged other Indian consumer tech companies to consider public market options.

Zomato’s market capitalization has experienced significant growth, reaching $14.5 billion, a substantial increase from its $5.4 billion valuation in private markets earlier in the year.

Pandemic Recovery and Market Expansion

Like Zomato, Swiggy faced considerable challenges during the pandemic. However, the company has demonstrated a strong recovery in recent quarters, as stated in July. Order volumes processed during that month were 30% higher than pre-pandemic levels.

Despite Amazon’s entry into the Indian food delivery market last year, the company has yet to establish a significant presence in this sector, as noted by a Zomato executive. Currently, Amazon’s food delivery service is limited to Bangalore.

India's Expanding Food Services Market

The Indian food services market represents a substantial opportunity, projected to reach $97 billion by March 2026, according to analysts at Bernstein. Their recent report to clients highlights the market’s potential.

Here's a breakdown of the market expectations:

• The Indian food services market is anticipated to reach $97 billion by FY25.
• Organized food service is experiencing faster growth and is expected to control 55% of the market share by FY25.
• Online penetration is projected to expand to 20% by FY25, resulting in a market size of $20 billion with a 46% CAGR.
• Growth will be largely driven by acquiring new customers and expanding into smaller markets.
• Zomato currently has 10 million monthly transacting users (MTU) and is expected to reach approximately 50 million by FY25.

Quick Grocery Delivery as a Growth Driver

Swiggy’s recent strategic move into quick grocery delivery has proven successful. This expansion has occurred while competitors like Grofers and BigBasket have either experienced limited traction or have been slower to fully explore this market segment.

Notably, Zomato, which invested $100 million in Grofers earlier this year, recently discontinued a pilot program focused on grocery deliveries.