In light of the funds raised by the platform, Swiggy announced that it would now pursue initiatives such as AI while strengthening its core business.
Online grocery delivery platform Swiggy has completed its $ 1.25 billion round led by SoftBank Vision Fund 2 and its existing funder Prosus, a company press release confirmed. The news comes a week after the Competition Commission of India (CCI) approved SoftBank’s proposed investment in Swiggy, the fund’s first investment in the Indian grocery delivery segment.
“This latest fundraiser was heavily oversubscribed due to strong investor interest and was driven by Swiggy’s rapid recovery from the effects of Covid-19 and subsequent growth in 2020-21,” the press release said.
Why is that important? Swiggy and Zomato, the two dominant online grocery delivery companies in India, have raised huge sums of money in the past few days. Swiggy – through its latest financing round and Zomato – through its initial public offering (IPO). The two platforms are also facing allegations from the National Restaurant Association of India (NRAI), which has asked CCI to investigate the companies for “inherently anti-competitive practices”. Will the recent funding further strengthen the influence of the two players in the food delivery market and deter competitors from emerging is an important question to consider.
In addition to grocery delivery, Swiggy is also engaged in instant grocery delivery via Instamart and pickup and return service via Swiggy Genie.
“Our biggest investments are in our non-food businesses, which have seen tremendous consumer love and growth in a short period of time, especially in the last 15 months of the pandemic,” – Sriharsha Majety, CEO of Swiggy.
More details about the last lap
Background: When Swiggy raised $ 800 million in April Business standard reported that SoftBank’s Vision Fund 2 plans to invest $ 450 million in the food delivery platform in the same round, valued at $ 5.5 billion. However, SoftBank’s investment was still pending approval by the CCI. This approval was granted on July 12th.
Attendees: Accel Partners, Wellington Management, Qatar Investment Authority, Falcon Edge Capital, Amansa Capital, Goldman Sachs, Think Investments and Carmignac participated in this financing round together with Softbank and Prosus.
Where should the funding go? The investment will flow into Swiggy’s core food delivery business as well as “building new food and non-food neighborhoods in 2021 and beyond,” the press release said. “To support this, Swiggy will improve its technology and AI capabilities and strengthen engineering, product, data science and analytics, business and supply chain teams for its newer initiatives,” the press release said. Swiggy “has the power to enable multiple companies to reach new age consumers on a daily basis, and grocery delivery is just the beginning,” said Sumer Juneja, SoftBank Investment Advisers.
Zomato goes public
The Rs 9.375 billion ($ 1.25 billion) initial public offering of Swiggy’s arch-rival Zomato, which opened between July 14 and July 16, was nearly oversubscribed forty times on the last day led by a strong response from qualified institutional investors and private investors. The allocation of shares is expected to be completed by July 22nd. As a result of the IPO, Zomato also went public as the first online food aggregator from India.
According to RedSeer, Zomato is the market leader in grocery delivery in India. The company had 169,802 active delivery partners and 148,384 active food delivery restaurants as of March 2021, Zomatos announced to Red Hering Prospect (RHP). In addition, the Indian food services market is expected to grow to $ 110 billion in 2025, the prospect added.
Zomato is also seeking a 9.3 percent stake in the online grocery delivery platform Grofers to compete with Swiggy’s Instamart grocery delivery service.
NRAI Asks CCI to Investigate Anti-Competitive Practices by Zomato, Swiggy
“During the pandemic, the level of anti-competitive practices by Zomato & Swiggy has increased many times over, and despite numerous discussions with them, these deeply funded marketplace platforms are not interested in allaying the concerns of the restaurants,” the NRAI said in a press release.
Issues that the NRAI has requested CCI to investigate include:
- Bundling of services
- Data masking
- Exorbitant commissions
- Deep discounts
- Price parity agreements
- Violation of platform neutrality
- Lack of transparency
- Vertical integration
- Exclusivity of listed restaurants
On July 12, the NRAI submitted additional information to CCI regarding the suspected anti-competitive practices. The NRAI alleged that restaurants would be threatened with removal if they offered better prices through other channels, were forced to offer discounts, charge exorbitant commissions, and experience delays in payment.
Impact of the proposed changes to e-commerce rules
The government proposed changes on June 21st that will give the existing consumer protection (e-commerce) rules more teeth in 2020.
The proposed rules apply to food delivery platforms such as Zomato and Swiggy and contain provisions that could affect the growth and future of these platforms. The rules require these platforms, among other things, to treat all sellers equally, prevent the promotion of certain groups of sellers, prohibit flash sales, curb private labels, explain the ranking process and stop using data for their own benefit products or a specific one Group of sellers.