Exclusive: Swiggy to raise internal round of $300 Mn with Naspers pumping over $150 Mn

Online food delivery firm Swiggy is in talks to raise $300 million in internal funding from its existing investors, after several months of discussions with external investors including Japan’s SoftBank haven’t materialised, according to two people familiar with the matter. 

Prosus Ventures (formerly Naspers Ventures), which owns around 40% of Swiggy, is likely to invest over $150 million while the remaining will pour in from other existing investors, added the two people cited above.

Swiggy has also held multiple conversations with several Korean funds over the last several months as the latter have been visiting India to make a few bets. Some of them, including STIC Investments and Mirae Asset are expected to infuse over $50 million together, added one of the two persons cited above.

“Swiggy has been engaged with SoftBank for many months now. However, the discussion didn’t materialise as SoftBank is more keen on investing if Swiggy and Zomato merge,” said the people cited above on condition of anonymity. 

This comes at a time when reportedly Swiggy and Zomato have held merger talks, but it remains unclear if these conversations have moved forward. Moreover, some say that even if these potential merger talks reach a positive conclusion, the Competition Commission of India may pose a hurdle.

This internal round, if and when it goes through, is important for Swiggy which has been burning close to $40-45 million a month and has been attempting at trimming the cash-burn, added the people mentioned above.

“With the runway amount shrinking, focus internally is on profitability, removal of heavy discounts and adding charges to customers,” said one of the people above who is familiar with the firm’s operations.  

Swiggy last raised $1 billion in December 2018 making it the largest funding round to have been witnessed in the Indian food delivery sector, which valued the firm at around $3.3 billion. The $1 billion included $800 million of primary capital and saw the participation of existing investors DST Global, Coatue Management and China’s Meituan Dianping along with new investors Tencent, Hillhouse Capital and Wellington Management Co. 

Since this round, Swiggy has been aggressively foraying into multiple avenues — milk delivery, expanding into small towns and cities, and also added Swiggy Stores, which provides other hyperlocal delivery services. This will help them diversify and use the delivery fleet more efficiently.

Swiggy, Prosus Ventures, Mirae Asset, STIC Investments and SoftBank did not respond to queries sent by Entrackr at the time of publishing this story. We will update with responses once we receive them.

Swiggy’s potential funding round also comes at a time when rival Zomato has been struggling to raise funds. According to a TOI report, Zomato has received a commitment of $200 million from Ant Financial and is also in talks to buy out UberEats as it looks to strengthen its position. Swiggy was close to buying UberEats earlier this year, but the transaction did not go through due to tax issues. 

Both Swiggy and Zomato clock about 35-40 million monthly orders with UberEats a distant third player in the market.