Swiggy raises $80 million from Naspers, others
BENGALURU: Online food delivery start-up Swiggy (Bundl Technologies Pvt. Ltd) has raised $80 million in a Series E funding round led by South African media company Naspers Ltd as it seeks to gain an edge over rival Zomato Media Pvt. Ltd.
Existing investors Accel Partners, SAIF Partners, Bessemer Venture Partners, Harmony Partners and Norwest Venture Partners also participated in the funding round.
The likes of RB Investments and Apoletto, the personal investment firm of Russian billionaire and founder of DST Global, Yuri Milner, stayed away from investing further.
Ashutosh Sharma, head of investments in India for Naspers, has joined Swiggy’s board
Mint reported on March 27 that Swiggy was in talks with Naspers and existing investors to raise at least $50 million.
Swiggy declined to specify details of the deal. Two people aware of the development said on the condition of anonymity that the company was valued at about $400 million, with Naspers infusing about $50 million.
Swiggy plans to deploy the fresh funds in strengthening technology, which would in turn help it personalise recommendations for consumers, improve delivery efficiency and reduce costs.
“We have reduced our delivery cost by 35% from last year. It is not only a function of scale, but also huge investments into technology. We are improving routing algorithms, ways to understand our capacity better, reduce wait time at restaurants by understanding their preparation time etc. Deliveries handled by third party logistics companies account for less than 1% of our overall deliveries,” said Sriharsha Majety, co-founder and chief executive of Swiggy.
According to Majety, Swiggy’s 13,000-strong delivery fleet currently delivers food in 37 minutes on average. The number of orders increased four times in March from the same month last year, while revenue grew six times. Swiggy claims to have more than 12,000 restaurants on board.
Swiggy is among the best funded food delivery start-ups in India, having raised about $155 million, apart from $8 million in venture debt from InnoVen Capital. This is second only to Zomato’s $224 million among home-grown food technology start-ups. The company currently operates in eight cities— Bengaluru, Delhi, Mumbai, Chennai, Pune, Gurugram, Hyderabad and Kolkata. Swiggy is also piloting its own kitchens in the city of Bengaluru.
“There are a lot of investments we are making in the future. The cities that we are already in, continues to provide us with huge growth. We are acquiring and retaining users at a very healthy clip. Growth will come by getting deeper into the cities we are already in and innovating a lot for the users we already have,” said Majety.
Food start-ups are among the segments worst hit by a slowdown in funding, which has prompted companies to hold back on expansion while burning huge amounts of cash to attract customers through offers and discounts. Some investors released cash only when certain business goals had been achieved.
Swiggy posted a near 65-fold increase in its loss for the fiscal year ended March 2016, indicating heavy cash burn, Mint reported on November 18 , citing filings with the Registrar of Companies. Swiggy’s revenue rose to ₹23.59 crore for the year ended March 31, 2016, from ₹11.59 lakh a year earlier.
The loss widened to ₹137.18 crore from ₹2.12 crore in fiscal 2015, the company’s filing with the Registrar of Companies shows. Total expenses were ₹160.77 crore, implying that Swiggy spent about ₹13 crore per month in FY2016.
In April, Zomato claimed that its revenue in 2016-17 rose 80% from a year ago to touch $49 million due to growth in advertisements and the food delivery business. The company’s advertising revenue, its core business until it entered food delivery in May 2015, grew 58% year on year to $38 million in FY17, while the food delivery business clocked $9 million, an eight-fold increase over FY2016.