It took SoftBank several years, but the Japanese investment giant is now ready to bet on India’s food delivery market. Swiggy said on Tuesday it has closed a $1.25 billion financing round led by SoftBank Vision Fund 2 and Prosus Ventures.
The new financing round, a Series J, includes the $800 million investment the Bangalore-based startup had disclosed to employees earlier this year. (SoftBank alone invested $450 million in the new round.) The new round, which Swiggy says was “heavily oversubscribed,” gives the six-year-old food delivery startup a post-money valuation of $5.5 billion.
TechCrunch first reported about Swiggy’s engagement with SoftBank and the proposed valuation of $5.5 billion in mid-April. Qatar Investment Authority, Falcon Edge Capital, Amansa Capital, Goldman Sachs, Think Investments and Carmignac and existing investors Accel Partners and Wellington Management also participated in the new round.
Swiggy said the new financing round shows the turnaround it has demonstrated in the past few quarters. Like many other startups, Swiggy was severely hit with the pandemic. The startup said its recent bet to expand into grocery delivery, and pickup and drop-off service, has paid off. The value of orders it is processing now is 30% higher than those in the pre-COVID times, it said.
“The participation of some of the most visionary global investors is a huge vote of confidence in Swiggy’s mission and ability to build an enduring and iconic company out of India. The scope of food delivery in India is massive and over the next few years, we will continue to invest aggressively into growing this category,” said Sriharsha Majety, chief executive of Swiggy, in a statement.
“Our biggest investments will be in our non-food businesses that have witnessed tremendous consumer love and growth in a short span, especially in the past 15 months of the pandemic. I believe the next 10-15 years offer a once-in-a-lifetime opportunity for companies like Swiggy as the Indian middle class expands and our target segment for convenience grows to 500 million users.”
The new investment comes at a time when Indian startups are raising record capital and a handful of mature firms are beginning to explore the public markets. Zomato, Swiggy’s chief rival in India, raised $1.3 billion in its initial public offering last week, and financial services startups Paytm and MobiKwik have also filed for their initial public offerings.
At stake is India’s food delivery market, which analysts at Bernstein expect to balloon to be worth $12 billion by 2022, they wrote in a report to clients earlier this year.
A third player, Amazon, also entered the food delivery market in India last year, though its operations are still limited to parts of Bangalore. At a virtual conference ahead of the IPO last week, Zomato executives dismissed Amazon as a serious competitor for now. “There’s no major impact on market share from Amazon so far,” the company’s chief financial officer said.
For SoftBank, a regular fixture of the Indian startup ecosystem, this is the first time it has bet on a food delivery player. The Japanese conglomerate has backed Indian startups in multiple categories, including e-commerce (Flipkart, Snapdeal, Meesho, Lenskart, Firstcry), ride-hailing (Uber and Ola) and edtech (Unacademy). SoftBank has invested in several food delivery startups globally, including DoorDash and Uber Eats. Prosus Ventures, an early investor in Swiggy, has also backed several food delivery startups globally.
"From its early days, I have had the privilege to watch Swiggy execute on their vision to become the leader in the convenience economy. Their focus on consumer delight, product innovation, and ecosystem support has made Swiggy a compelling digital experience in India. They have the railroads in place to empower multiple businesses to reach the new age consumer on a daily basis, and food delivery is just the beginning,” said Sumer Juneja, partner at SoftBank Investment Advisers, in a statement.
Swiggy said it will deploy the fresh funds to accelerate its "multi-year strategy" of growing its core food delivery business and building new food and nonfood adjacencies this year and beyond.
Further reading: Swiggy begins pilots on an #OrderDirect product (The CapTable).