Unpacking Swiggy’s last round: SoftBank picks up 9.13% stake, co-founders slip below 8%

On Tuesday, foodtech company Swiggy had announced that it closed a $1.25 billion round led by SoftBank Vision Fund 2 and its existing backer Prosus of which $800 million was already received by the Bengaluru-based company in April 2021.

While Swiggy did not provide the actual break up of the top-up round led by SoftBank, the company’s regulatory filings reveal an interesting picture for Fintrackr research.

Swiggy has allotted 123,411 Series J2 preference shares and 10 equity shares at an issue price of Rs 271,961.4 to Softbank Vision Fund to raise Rs 3,356.6 crore or $450 million. It means the top-up round was entirely funded by SoftBank.

Fintrackr’s estimates show that Swiggy has raised the fresh capital at around $5.4 billion valuation and the Japan-based investor has acquired 9.13% stake in the company.

Following the allotment of shares, the collective stake of Swiggy’s promoters or co-founders --Sriharsha Majety, Nandan Reddy and Rahul Jaimini -- have been diluted to 7.9%. The co-founders’ collective stake was estimated at around 8.12% during the $800 million tranche in April which also saw the participation of Accel Partners, Wellington Management, Qatar Investment Authority, Falcon Edge Capital, Goldman Sachs and others.

It’s worth noting that Jaimini had put in his papers in May 2020 to join edtech startup Pesto as a co-founder. The company saw another top level exit this year when its chief operating officer or COO Vivek Sunder decided to quit after a three-year stint.

Meanwhile, Swiggy recently elevated  Phani Kishan, the company’s vice president of strategy and investments, to a co-founder role.

Following the SoftBank infusion, Swiggy has an aggressive plan to invest the fresh funds in non-food verticals along with exploring M&A opportunities and hiring tech talent. The company emphasized that it will invest in its hyperlocal grocery and essentials delivery service Instamart and plan to expand it to more cities. 

Currently, Instamart is operational in Bengaluru and Gurugram and some select areas of Mumbai. The proceeds will also be deployed to strengthen its micro delivery service SuprDaily. At present, SuprDaily does over 200K orders and Swiggy is aiming to take its volume to 350K by the end of this year. 

While Swiggy had raised $1.25 billion from investors in the private market, the company’s arch-rival Zomato raised almost the same amount through initial public offering or IPO. According to experts tracking foodtech space, flush with the new funds both Zomato and Swiggy would continue to compete aggressively to dominate market share.

This is SoftBank’s first bet in a foodtech company in India after declaring plans to pump in around $4 billion in the country across SaaS, B2B marketplaces, e-commerce, healthtech and edtech space in the ongoing calendar year. Since January, SoftBank has invested in Flipkart, Meesho, Zeta and Whatfix and is reportedly in talks to back OfBusiness and Unacademy.