Swiggy Raises $1.25 Billion in Funding

SoftBank Invests in India's Swiggy, Valuing it at $5.5 Billion

After several years of observation, SoftBank, the prominent Japanese investment firm, has finalized a significant investment in India’s thriving food delivery sector. Swiggy announced on Tuesday the successful completion of a $1.25 billion funding round, spearheaded by SoftBank Vision Fund 2 and Prosus.

Details of the Funding Round

This Series J financing incorporates the $800 million investment previously communicated to Swiggy employees earlier in the year. Specifically, SoftBank contributed $450 million to this latest round. The funding, described by Swiggy as being “significantly oversubscribed,” establishes a post-money valuation of $5.5 billion for the six-year-old food delivery company.

Reports from TechCrunch in mid-April initially highlighted Swiggy’s discussions with SoftBank and the anticipated $5.5 billion valuation. The investment round also saw participation from Qatar Investment Authority, Falcon Edge Capital, Amansa Capital, Goldman Sachs, Think Investments, Carmignac, as well as existing investors Accel Partners and Wellington Management.

Swiggy’s Recent Performance and Expansion

Swiggy attributes the successful fundraising to a demonstrable turnaround in performance over recent quarters. The company experienced substantial challenges during the pandemic, a situation shared by many startups. However, its strategic expansion into grocery delivery, alongside pickup and drop-off services, has proven beneficial.

Currently, the total value of orders processed by Swiggy is 30% greater than pre-COVID levels. This indicates a strong recovery and growth trajectory.

Executive Statements and Future Plans

Sriharsha Majety, Swiggy’s chief executive, stated that the involvement of leading global investors represents a substantial endorsement of the company’s mission and its potential to become a lasting and iconic Indian brand.

He further explained, “The Indian food delivery market is exceptionally large, and we intend to continue investing heavily in its growth over the coming years.”

Key areas for investment will be Swiggy’s non-food businesses, which have experienced considerable consumer adoption and growth, particularly throughout the pandemic. Majety believes the next 10-15 years present a unique opportunity for companies like Swiggy as India’s middle class expands and the demand for convenience increases to encompass 500 million users.

Broader Trends in the Indian Startup Ecosystem

This investment arrives during a period of record capital raising among Indian startups, with several established companies now considering initial public offerings (IPOs). Zomato, Swiggy’s primary competitor, recently completed a $1.3 billion IPO. Paytm and MobiKwik have also filed for their respective IPOs.

Market Potential and Competition

Analysts at Bernstein project that India’s food delivery market will reach a value of $12 billion by 2022, as detailed in a report released earlier this year.

Amazon has also entered the Indian food delivery market, though its operations are currently limited to select areas of Bangalore. Zomato executives, during a pre-IPO conference, downplayed Amazon’s competitive threat, stating that there has been “no major impact on market share” from Amazon thus far.

SoftBank’s Strategy in India

This marks SoftBank’s first investment in an Indian food delivery service. The Japanese conglomerate has a substantial portfolio of Indian startups across various sectors, including e-commerce (Flipkart, Snapdeal, Meesho, Lenskart, Firstcry), ride-hailing (Uber and Ola), and edtech (Unacademy). Globally, SoftBank has invested in other food delivery companies like DoorDash and Uber Eats.

Prosus, an early investor in Swiggy, also has a history of backing food delivery startups internationally.

SoftBank’s Perspective

Sumer Juneja, partner at SoftBank Investment Advisers, commented, “I’ve been privileged to witness Swiggy’s execution of its vision to lead the convenience economy since its inception. Their dedication to customer satisfaction, product innovation, and ecosystem support has created a compelling digital experience in India.”

He added, “Swiggy has established the infrastructure to empower businesses to reach the modern consumer daily, and food delivery is just the beginning.”

Future Deployment of Funds

Swiggy intends to utilize the newly acquired funds to accelerate its “multi-year strategy,” focusing on expanding its core food delivery business and developing new offerings in both food and non-food categories in the years ahead.

Additional Information: Swiggy is currently piloting an #OrderDirect product (The CapTable).