SoftBank Nears Significant Investment in Swiggy

Discussions are reportedly in their final stages for SoftBank Vision Fund 2 to inject up to $500 million into Swiggy, a leading Indian food delivery company, according to two individuals with knowledge of the negotiations who spoke with TechCrunch.

This potential investment would establish Swiggy’s valuation at approximately $5.5 billion, these sources indicated.

Adding to Recent Funding

The prospective capital injection follows Swiggy’s announcement earlier this month of an $800 million funding round. SoftBank had initiated exploration of investment opportunities within India’s food delivery sector earlier in the year.

Consideration was given to Swiggy’s competitor, Zomato, but SoftBank ultimately favored Swiggy earlier this week, a source confirmed.

Both Swiggy and SoftBank have declined to provide official statements. The sources requested confidentiality due to the non-public nature of the details.

Competitive Landscape and Market Growth

These investment discussions coincide with Zomato’s recent fundraising of $910 million in preparation for an initial public offering (IPO) later this year. Zomato’s most recent valuation reached $5.4 billion.

During its fundraising efforts, Zomato stated that a portion of the capital was intended to address potential competitive pressures and “price wars” from rivals.

Amazon has also entered the Indian food delivery market, although its operations are currently confined to select areas of Bangalore.

Market Potential

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

Swiggy’s Future Ambitions

Following the $800 million fundraise, Swiggy’s co-founder and CEO, Sriharsha Majety, communicated to employees that the new funding provides “more firepower” than initially planned for current business operations.

He also expressed the intention to explore and experiment with new offerings for potential future investment.

Majety emphasized the need for continuous innovation and execution to establish Swiggy as a lasting and iconic Indian company.

Long-Term Goals

The startup’s long-term objective is to serve 500 million users within the next 10 to 15 years, drawing inspiration from Chinese food delivery giant Meituan, which boasts 500 million transacting users and a valuation exceeding $100 billion.

Majety acknowledged the challenges posed by the COVID-19 pandemic, stating that the company has successfully navigated a difficult period and that future efforts must prioritize long-term success.

Past Adjustments

Swiggy, with Prosus Ventures as a major investor, implemented workforce reductions and scaled back its cloud kitchen initiatives last year as a response to the pandemic and the resulting lockdowns imposed by New Delhi.

Zomato also undertook similar measures during the same period.

Additional insights into the deal negotiations are available from Indian news source The CapTable.

SoftBank’s Broader Investment Strategy

TechCrunch also reported on Wednesday that SoftBank Vision Fund 2 is currently engaged in discussions to invest in Zeta. The firm has previously invested in prominent companies such as Flipkart, Ola, and Oyo.

Earlier this month, SoftBank provided backing to social commerce platform Meesho.

Further Information: An article in The CapTable explores Swiggy’s pursuit of a leading position in the high-speed grocery delivery sector.