MUMBAI: South African media giant Naspers has led an investment of $100 million in food delivery firm Swiggy , along with China's online-to-offline service platform Meituan-Dianping, which is backed by Tencent. The round draws the curtains on months of negotiations which also saw SoftBank and Flipkart trying to woo the Bengaluru-based online food-delivery platform.
The deal is likely to have valued the four-year-old venture at about $650-700 million, according to people aware of the deal financials. Swiggy was last valued at $400 million when Naspers led an $80-million investment in May last year. With this, the total amount raised by Swiggy stands at $255.5 million, second only to the $443 million raised by competitor Zomato . The latter had raised $200 million from Ant Financial just last week. ET was the first to report that Naspers was in advanced talks to lead a $150-200 million investment round in Swiggy, in its edition dated January 4th. Naspers holds 33% in Tencent which is the lead investor in Meituan-Dianping.
At a valuation of $40 billion, Meituan-Dianping is the world's fourth most valuable startup and dominates the online-to-offline market in China where it is battling stiff competition from Alibaba-backed startup Ele.me.
Back home, the battle is hardly different with Tencent (through Naspers and Meituan-Dianping) and Alibaba (through Ant Financial), throwing their weight behind Swiggy and Zomato respectively.
To maintain its lead in the food technology market, Swiggy is looking at a long-term strategy of building products and services around plugging supply gaps in the marketplace and will see the firm invest in its new supply business line. "With this funding, we will further invest in building differentiated offerings, plugging the white spaces in the ecosystem, and developing our technology while keeping superlative customer experience at the core," said Sriharsha Majety, CEO, Swiggy. Swiggy, the winner of the ET Startup Awards 2017 , leads the domestic online food-delivery market by volume, handling more than 1,40,000 orders a day in India. Zomato handles about 100,000 orders a day in India and the UAE. With the gush of capital in the space, aggregators will strive for increased volumes from existing key markets by strengthening supply chain gaps in these cities, even as they expand beyond metros to Jaipur, Kochi, Ahmedabad and Chandigarh to gain market share, feel industry experts. "Aggregators will look at facilitating restaurant access in low supply areas through their cloud kitchens, aim for exclusive restaurant partnerships, late-night deliveries and thus try to boost volumes by closing the supply gaps," noted Rohan Agrawal, engagement manager at Redseer Consulting.
Ola's recent acquisition of Foodpanda India has made food delivery a five-way battle between Zomato, Swiggy, Foodpanda, UberEATS and Google Areo. The Indian food delivery market grew 140% to $700-750 million in 2017, up from about $300 million in 2016, according to Redseer Consulting. Continuing on this momentum, RedSeer estimates the sector is on course to reach a gross merchandise volume of $1.5 billion by 2018-end and $2.5-3.5 billion by 2021.
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