Taking the competition in the online food segment up a notch, Swiggy is in talks with investors for yet another round of funding. The last funding that Swiggy saw was in late June, when it raised $210 million from a host of investors making it the fastest entrant in the much-coveted unicorn club. The food delivery app is in talks with new and existing investors to raise something between $250 million to $500 million, taking its valuation to anywhere between $2.3 and $2.5 billion.
This will be Swiggy's third round of funding in 2018. People in the know said that some of the company's early investors may sell their shares in this round.
New investors that Swiggy held talks with for this round include SoftBank, growth equity firm General Atlantic and a few Chinese hedge funds. Current investors that are part of Swiggy's latest round of funding are Meituan Dianping and Naspers. At 23%, Naspers currently holds the largest stake in the homegrown company.
Zomato, not to be undone, is also reported to be in talks with existing backer Ant Financial and Singaporean holding company, Temasek. Zomato is aiming to bring in $300 million in their latest round. In February, the Gurugram-based online food app raised $200 million from Ant Financial, after which it was valued at $1.1 billion. If this round of funding comes through, Zomato, too, would be valued around $2 billion.
To stay ahead of each other, both the companies are expanding their geographical reach. While Swiggy is looking to establish a strong foothold in the Zomato-dominated Northern Indian cities, Zomato is looking to do the same in the Southern cities dominated by Swiggy. Zomato and Swiggy are not only offering discounts but are also trying to rope in restaurants exclusively by cutting down on the commission they get. To this end, both the companies are burning cash to the tune of $18 million - $20 million per month. Hence both the players have been raising funds more frequently.
To add to that, Swiggy is also planning to diversify into the hyperlocal delivery segment. The online food delivery app is planning to start delivery for categories like medicines and groceries in their diversification strategy. The "concierge-like service" would enable buying and delivery of products from any store in the city including grocery, pharmacies, flower and gift shops. As per the report, the service would also include a customer-to-customer pick-up and drop service. To see this plan to fruition, Swiggy has taken its first step by acquiring Scootsy, an on-demand delivery service based in Mumbai.
As they expand their reach and verticals, Swiggy also needs a robust fleet of delivery executives. Swiggy has been expanding its delivery network to match up with their scaling. It now boasts a 55,000-executives strong delivery fleet from 30,000 at the beginning of the year and is aiming to almost double their fleet in six to nine months. This is a strategy adopted by rivals Zomato and UberEats as well. Food delivery platforms are offering upto Rs 40,000/Rs 50,000 per month, a significant jump from their earlier Rs 18,000 to Rs 20,000 to bring in more delivery executives under their payroll.
The online food delivery service fulfills around 14 million orders every month while Zomato sees around 10.5 million orders across India and UAE.
(Edited by Anwesha Madhukalya)