Indian food delivery services startup Swiggy has completed a US$1 billion funding round led by existing investor Naspers, the South African internet and media group, and some new backers that included Chinese social media and gaming giant Tencent Holdings (00700.HK).
Among the previous backers, Hong Kong-listed delivery services firm Meituan (03690.HK) also participated in the new funding round, as well as Coatue Management and DST Global.
Meanwhile, joining Tencent in the list of new investors were Hillhouse Capital and Wellington Management, according to an announcement from Swiggy.
Financial terms and post-money valuation were not disclosed in the announcement, but according to India’s Economic Times newspaper, the deal strikes a pre-money valuation of US$3.3 billion for the startup.
Naspers said in a statement that it had invested US$660 million in Swiggy during the latest round.
Swiggy plans to use the new funds on efforts aimed at bringing more quality food brands onto its platform. Money will be spent on hiring new talent and to strengthen the firm’s technology backbone, and build “an AI-driven platform for hyperlocal discovery and on-demand delivery.”
Economic Times suggested that Swiggy, which is based in Bangalore, might use the fresh capital to expand into new businesses like grocery and online pharma delivery, leveraging its in-house fleet of 120,000 delivery service personnel.
Naspers, Africa’s most valuable company, had invested heavily in Swiggy, leading two previous funding rounds to become the Indian startup’s biggest shareholder, according to Bloomberg.
Earlier this year, the Cape Town-based group exited from Indian e-commerce platform Flipkart, reaping a US$1.6 billion profit as it sold its 11 percent stake in the firm to Walmart.
Naspers currently owns more than 30 percent stake in Tencent, after having made a blockbuster early bet on the Chinese internet giant.
Coming to Swiggy, the startup, along with rival Zomato, has dominated the Indian food ordering and delivery market, riding on the rapid smartphone adoption across the country.
Other competitors include FreshMenu and Foodpanda India, which was acquired by Indian ride-hailing startup Ola late last year.
In addition to its in-house delivery fleet running across multiple cities in India, Swiggy is said to stand out by offering a more curated list of restaurants and services on its mobile-based application.
Crunchbase noted that the startup charges between 15 and 40 percent in commission to restaurants and for smaller orders, while customers pay an additional delivery charge between 20 and 50 rupees depending on the cities.
Swiggy now partners with over 50,000 restaurants in more than 50 cities in the country, the firm claims.
According to filings with Indian authorities, Swiggy recorded revenue of Rs 133 crore (US$19 million) in the financial year 2016-17, up from Rs 20 crore the previous year.
The four-year-old startup, founded by Nandan Reddy, Rahul Jaimini, and Sriharsha Majety, has raised US$1.5 billion since founding, Crunchbase data suggests.
It reached the so-called unicorn status (a privately held startup valued at over US$1 billion) after a Series G funding round led by Naspers and DST Global in June this year.
In an interview with Bloomberg, Larry Illg, Naspers’s chief executive officer of food and ventures, revealed that Swiggy has ten times the number of orders per month since Naspers’ first investment in 2017.
In the last six months, Swiggy has expanded to 42 additional cities, in tier-two and tier-three India, and doubled in gross merchandise value, the company said in a statement.
Tencent’s domestic rival Alibaba Group has also targeted India’s fast-growing food delivery services market for investment.
In October, Alipay Singapore, a unit of Alibaba affiliate Ant Financial, reportedly invested US$210 million in Zomato. Alipay Singapore will own over 10 percent stake of Zomato after the deal, which valued Zomato at US$2 billion. As a previous investor, Ant Financial had already owned about 20-22 percent stake in Zomato.
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