With competition in the food delivery segment getting fiercer by the day, Swiggy is now looking to raise funds again and could be raising $700 million in a fresh round. And the investor could be Tencent Holdings Ltd of China and others, as per a Mint report.
However, this time, Swiggy is looking to raise funds to foray into new business areas in addition to food order delivery and these funds could be used there. These areas could include hyper local delivery of daily needs of people such as milk, bread and so on.
The organization may follow a twin strategy. While internal growth will be pursued to build the team to handle the new product offerings, the organic route will be taken to achieve the overall objectives. A couple of startups, Suprdaily and Sccotsy have already been acquired and work is going on in integrating their activities within the overall business plans.
Observers see a pattern in Swiggy’s plans comparing it with China’s Meituan Dianping, which is not only one of China’s largest food delivery platforms, but now an investor in Swiggy as well. And Meituan Dianping also has diversified into making deliveries of diversified stuff.
If Swiggy does go ahead with its new plans to enter the delivery of fresh articles, it will come in direct conflict in the marketplace with the current leader BigBasket.
Getting back to the funding exercise, it is expected that post this funding the valuation of Swiggy may jump to $2.5 billion from around $1.3 billon when it raised its last tranche of funding earlier in the year. Some sources have reported that Swiggy was in talks to raise $500 million from SoftBank of Japan, but the talks were not conclusive.
It has been earlier explained by one of the founders of Swiggy and its CEO Sriharsha Majety that Swiggy was not pursuing funding options because it needs those funds; he claimed they are already adequately funded. But they are doing this to pursue new business opportunities and if there funds available and investors are willing to place their faith on the company and by inducting these funds Swiggy is able to clock a much quicker growth, then they would rather take it.
Though Swiggy has already raised around $465 million as opposed to $375 by rival Zomato, both have been seen to be in a race to burn more cash to gain business in their core area of food order deliveries.