Food delivery startup Swiggy is set to receive a funding of $200 (Rs 1280 crore) from Naspers, the South African company. According to a report in Economic times, Chinese internet major Tencent will also be participating in this round of investment in Swiggy, which has emerged as the leader in its line of business. Swiggy’s valuation might have also jumped from $400 million when the last batch of investments were made, to $600-$650 million before the Naspers/Tencent fund comes in. This occurred in May 2017 and Naspers had put in $80 million then.
The significance of this announcement, though not officially confirmed, is that this is coming through after discussions with the Japanese investor SoftBank’s efforts to make an investment in Swiggy did not succeed. Flipkart was also keen to invest in the online food delivery company, but the deal did not go through. Experts point put that Naspers and Tencent do have an ongoing arrangement, by which they co-invest in many companies together.
SoftBank was also looking at investing a similar figure of around $200 million in Swiggy and they wanted a minority stake in the company. Interestingly, SoftBank is going ahead and is expected to make an investment of $9 billion in cab aggregator Uber, which also has a food delivery arm, Uber EATS.
While the exact reasons for the failure of discussion by SoftBank with Swiggy are not clear, it is being reported that the deal with Flipkart did not come through due to the latter insisting on PhonePe, its digital payment platform be made the exclusive payment channel on Swiggy, to which Swiggy did not agree. For the record, Swiggy accepts payments from its customers via Paytm or MobiKwik. There was also the move earlier last year made by the Chinese giant Alibaba to merge Swiggy and Zomato, but did not materialize due to different issues, mainly related to valuations.
Swiggy claims to handle around 140,000 deliveries across India every day and its close rival is Zomato, does about 100,000 combined for India and UAE. There is a third player, Foodpanda that fulfils 30,000 orders per day and is now in Ola’s basket, after the cab aggregator acquired the startup.
So, one may witness a different battle of sorts between Uber and Ola, since UberEATS does only around 6,000 orders a day and will have to do the catch-up act.
In terms of funds raised, Swiggy has so far raised a total of $163 million (including $8 million in debt funding) and Zomato has raised $225 million so far.