Online food ordering startup Swiggy.com is said to be in talks to raise at least $50 million (around Rs 325 crore) in fresh funding, as it looks to beef up its war chest to take on bigger rivals Foodpanda and Zomato.
Swiggy, operated by Bangalore-based Bundl Technologies Pvt. Ltd, is in discussions with South African media and Internet conglomerate Naspers Ltd and Chinese firm Fosun International to raise the funds, Mint reported, citing two people aware of the development it didn’t name.
Swiggy and Fosun didn’t respond to an email from VCCircle seeking comment till the time of filing this article. Naspers said it does not comment on “rumours or speculation”.
The talks come at a time when most of Swiggy’s peers in the broader food-tech segment have been going through a rough patch. Investors have tightened their purse strings for food-tech startups as most burnt cash heavily to lure customers, which subsequently led many to hold back expansion, lay off staff or shut down operations.
While a few startups in the segment have elicited investor interest of late, the transaction-driven nature of the business, weak unit economics and wafer-thin margins mean they have a difficult road ahead.
However, Swiggy has managed to buck the trend so far. It has raised about $75.5 million in total, including $15 million in a Series D round from Bessemer Venture Partners, Accel India, SAIF Partners and Norwest Venture Partners in September 2016. It had raised $35 million in Series C funding in January 2016.
Still, this is lower than the estimated $225 million that Zomato Media Pvt. Ltd raised since its inception in 2008 till its last round in 2015, when it mobilised $60 million from Singapore state investor Temasek and others.
The latest funding round, if it goes through, will help Swiggy intensify competition with Zomato and Foodpanda. Already, Swiggy appears to be in a more comfortable position than Zomato. According to a VCCircle analysis last week, Zomato can survive two years while Swiggy has a runway for about two-and-a-half years without fresh funding.
If Swiggy manages to raise additional capital, it will add to its marketing and operational strength in the three-cornered contest in the food-ordering segment.
Going by revenue, Swiggy trailed Zomato and Foodpanda in 2015-16. Zomato’s revenue from India business was around Rs 90 crore in the last financial year. Foodpanda India’s revenue was Rs 37.8 crore while Swiggy posted nearly Rs 24 crore revenue in 2015-16.
However, all companies are making heavy losses. Zomato plunged deeper into the red in 2015-16 and even pushed its parent Info Edge (India) Ltd into losses. In December last year, Foodpanda India reported that its loss for the financial year ended 31 March 2016 quadrupled to Rs 142.6 crore from Rs 36 crore a year before. Swiggy posted a loss of Rs 137 crore for 2015-16. Fresh funding in such a scenario will be more than welcome.
Note:- This article has been updated to include Naspers’ response.
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