Swiggy, an Indian food delivery company, is looking to raise more than $500 million in a new financing round. It could be worth over $10 billion according to two sources who were familiar with the matter.
Atlanta-headquartered Invesco is in talks to lead or co-lead the new financing round in the Bangalore-based startup, which counts SoftBank Vision Fund 2, Falcon Edge Capital, and Prosus Ventures among its existing investors, sources added.
One of the parties said that a deal is not yet finalized so terms could change. Swiggy did not comment Monday. Indian news outlet CapTable reported the first mention of the fundraise talks.
Three months ago, Swiggy closed a $1.25billion funding round with a post-money value of $5.5billion. Zomato, the startups main rival in India, made a strong debut on Indian stock markets this year, which opened the door for Indian consumer tech startups looking to enter public markets. Zomato's market cap has risen to $14.5 billion via stock exchanges from the $5.4 billion it received in private markets earlier in the year.
Like its old rival Zomato in the past, Swiggy was also severely affected by the pandemic. The startup stated in July that it had seen a strong recovery in the last quarter. It stated that the value of the orders it processed in July was 30% more than those it processed in pre-COVID days.
Amazon also entered India's food delivery market last year. However, a Zomato executive stated in a forum this year that the company has yet make significant progress in this area. Amazon's food delivery service is currently available only in Bangalore.
In India's food service market, $97 billion is at stake, Bernstein analysts wrote in a report to clients.
India's food services market is huge and will reach $97 billion in FY25. Organized food services are growing faster, and will account for 55% of the market by FY25. Online penetration will increase to 20% by FY25, and the market size will reach $20 billion. This is a 46% CAGR. New customer acquisition and penetration in smaller markets will drive significant part of this growth. Zomato reported that it had 10 million monthly users (MTU) during FY20. This number is expected to rise 5x through FY25 to 50 millions, they wrote.
Swiggy's recent bet on expanding into quick grocery delivery has gained traction when other competitors (Grofers, BigBasket) either have not seen the same traction or are still exploring the space. Zomato, which earlier this year invested around $100 million in Grofers, has this month ended a pilot program that was testing grocery delivery.
