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India’s competitive online food delivery market just got a lot tougher with Swiggy’s announcement that it had raised another $1 billion in fresh capital, the largest funding round yet by a company in this sector.
Swiggy, which is run by Bundl Technologies, has raised $1.26 billion in total and is now reportedly valued at $3.3 billion.
While the fresh infusion of funds is expected to further fuel the competition with other players including Zomato Media, Foodpanda India (which is owned by ride-hailing startup Ola) and UberEats, the country has “enough steam for three or four well-funded players,” said Ankur Pahwa, partner and national leader – e-commerce and consumer internet, EY India. “India is such a large market and the geography is so different that so far this is not a winner-take-all category.”
But for any of the players to succeed, they will need to offer more local services than just food delivery, added Pahwa. “That’s where the play will be,” he said.
Swiggy’s partnership with Meituan Dianping gives it the opportunity to tap into some of the expertise gained by China’s largest on-demand food delivery firm. Meituan has grown to become one of the most valuable internet firms in China, which apart from delivering food, also gives users the opportunity to buy movie tickets and book hotel rooms on its platform.
To be sure, Meituan’s strategy is still no guarantee of success as its rapid growth has been fueled through cash incentives for both its consumers and suppliers. Meituan, which went public earlier this year, is still in the red, despite having more than 300 million active users on its platform.
India’s online food delivery sector has also had to face a number of other challenges in recent years, such as retaining delivery staff who are often not well paid, improving customer experience and operational efficiency across the various networks, Pahwa said.
This latest funding round was led by existing investors Naspers, DST Global, Meituan Dianping and Coatue Management, as well as a few new investors, including Tencent, Hillhouse Capital and Wellington Management Company, the company said in a statement.
Swiggy intends to use the funds to increase its line-up of restaurants and delivery-only kitchens. Some of the funds will also go toward strengthening its technology backbone, including building a next-generation AI-driven platform, the company said. Swiggy, which was founded in 2014, is already present in more than 50 cities.
December 21, 2018 at 06:12AM
Forbes – Entrepreneurs