Foodtech major Swiggy is all set to raise its third round of investment this year. It is expected to raise around $900 million at a valuation of $3 billion by next month.
The investment round will witness one-third ($300 Mn) of the money coming in via secondary share sales by early-stage backers, said an ET report quoting sources close to the development. This secondary segment of the funding is reported to be executed at $2.5 billion valuation.
The existing investors selling their stakes include Norwest Venture Partners, Accel, Bessemer Venture Partners, and SAIF Partners. Together, they own 39 per cent of the food tech firm.
Swiggy’s earliest investors, RB Investments and Harmony Partners are also planning to sell their 3 per cent cumulative stake. They all are expected to get a handsome return for their investment.
Norwest, which has invested around $20 million three years ago, is anticipated to make 4X gain through the secondary sale, added sources.
Following the investment, Naspers’ holding will rise up to 40 per cent from the current 23 percent in the four-year-old firm. Tencent, along with other existing investors Meituan Dianping, Coatue Management, and DST Global, are expected to participate in this round.
If it goes through, this will be the largest liquidity event for early investors in the country. The development will also mark a shift in the Indian startup ecosystem, where till now all the major liquidation happened in firms older than 5 years.
The firms including Ola, Flipkart, Zomato, Paytm, Lenskart, BigBasket, and Pine Labs had offered a partial exit to their investors, founders as well as employees. Till now, 2018 has seen secondary share purchases worth over $710 million altogether.
The secondary share sale is considered as an encouraging factor not only for investors, founders and its employees but also for the ecosystem as most money gained via the event is deployed back in early-stage startups.
A recent example is the exit of Flipkart’s co-founder Sachin Bansal, who made around $1 billion through the secondary deal and committed $400 million in a fund to foster startups.
One of the best parts about the secondary share sales is the massive rewards that the employees gain out of these. 30 employees of Rivigo earned around a total of Rs 71 crore in a single transaction and more than 200 employees of Paytm have also gained around Rs 200 crore via multiple such transactions.
As far as funding is concerned, the Bengaluru-based firm has raised about $310 million during the year. Out of this, $210 million was raised in June in a transaction which turned Swiggy into India’s 12th unicorn. Remaining $100 Mn, it had raised in February from Naspers and Meituan.