Indian online food delivery startup Swiggy looks set to raise a further US$500-700mn from both existing investors and Chinese conglomerate Tencent
The Bangalore-based company operates a service similar to British company Deliveroo, allowing consumers to order food for delivery from local restaurants via a fleet of delivery drivers.
Swiggy’s website claims that its “delivery personnel carry one order at a time which ensures we get reliable and fast deliveries”.
Economic Times reported that the figure would amount to “the biggest cheque in India’s food-technology sector”, with Tencent looking to contribute a significant amount.
Other investors include South African internet and media company Naspers, an existing backer aiming for a contribution of $200-250mn, alongside China’s Meituan Dianping, US hedge fund Coatue Management, and DST Global, according to Business Today.
Tencent and Coatue Management denied requests for comment, Economic times said, citing an unwillingness to discuss “market speculation”.
Swiggy’s previous round of fundraising in June launched it into unicorn status, with a valuation of $1.3bn.
Economic Times added that this latest investment could see the startup’s value rise to $2.5-3bn, according to two people close to the deal.
Swiggy faces competition from Zomato, a similar company which, according to Economic Times’ sources, raised 12mn orders in August compared with Swiggy’s 19mn.
In this young market, competition for market share is fierce and expensive.
“Zomato has been spending over $20 million a month on discounts and cashbacks to bump up order volumes”, Economic Times said.
Rahul Singh, President of National Restaurant Association of India, commented: “Both Zomato and Swiggy are creating new habits of online ordering, especially in tier 2 cities and beyond. Inducing such behaviour obviously comes at an extremely high customer acquisition cost (CAC)”.
“The big worry is that unlike in the US, where users are loyal, thus justifying the CAC for aggregators, Indian users will jump for a better deal”.