Bengaluru-based food delivery platform Swiggy has investors lining up for a pie of the fast-growing footech major. According to an exclusive report by The Economic Times, Tencent, which owns WeChat wants to invest a major chunk of the funds Swiggy is looking to raise. It has reportedly held talks with various investors to raise around $500-700 million.
The company has already raised funds in 2018 twice and the money raised so far has been around $310 million. Swiggy has upped its ante in the fierce competition with rival Zomato, which has led to higher spending on customer acquisition and an insatiable requirement for funds.
With global investors lining up for Swiggy,the amount being raised could go up to $650 million, and the valuation of the company could rise to around $2.5 billion, almost twice as much as it was evaluated last.
Tencent is said to be keen on picking up a large chunk of the current round of fund-raising of $650 million. Bus so are others; among them existing investors Naspers of South Africa are equally keen to pick up $200 to 250 million. SoftBank of Japan would want to come on board for the first time and other existing investors, Meituan DianpingCoatue Management and DST Global are all expected to make their contributions in the investment. None of the companies mentioned here have confirmed any of these developments officially. There are indications that some of the investors may even exit the company.
As mentioned, it is the increase in expenses that has necessitated this fund-raising exercise. The figures being quoted by market observers is in the region of $20 million each by Swiggy and Zomato and most of these are going towards finding new customers and take the business to newer territories, move away from large cities and take on smaller ones.
In one sense Zomato and Swiggy are expanding the market by pulling in many first-time customers ordering food online. The companies carry the risk of losing these customers since the concept of customer loyalty does not work well with deep discounting and heavy marketing.
Both Swiggy and Zomato are aggressively growing their order numbers as well with Swiggy clocking 19 million orders a month and Zomato’s figures for June standing at around 12 million while the smaller players like UberEats and Foodpanda do 3 million and 1.5 million respectively.
If and when the funds are in for Swiggy, the company is expected to not only work on its regular business but strengthen some of the initiatives it has started in diversifying its operations.