How Has Swiggy Raised $800 Million Despite Heavy Losses

by Adarsh Modi

How Has Swiggy Raised $800 Million Despite Heavy Losses

April 7, 2021

Swiggy in a recent fundraising drive raised close to $800 million while raising its valuation from $3.6 billion to $4.9 billion.

India was once the lost and distant land of spices and snakes. But that was the case before 1991. The then prime minister P.V. Narsimha Rao along with his finance minister Manmohan Singh altered the course of the Indian economy for good when they announced their LPG economic policy and opened the doors of the Indian economy to the entire world.  

That was 1991; this is 2021, and India is now the world’s leading marketplace for thousands of bustling startups in genesis.  Close to six thousand startup funding deals have gone through with a total valuation of $70 billion in just six years, 2014-2020.  

Swiggy in a recent fundraising drive raised close to $800 million while raising its valuation from $3.6 billion to $4.9 billion.

Swiggy's Run

The household name Swiggy in a recent fundraising drive raised close to $800 million while raising its valuation from $3.6 billion to $4.9 billion. The funds came from a new set of investors like Falcon Edge, Goldman Sachs, Amansa Capital, Think Investments, and Carmignac.   

It was imperative for Swiggy to get this round of fundraising completed in order to compete with the Gurugram based rival Zomato which also raised $900 million, making its valuation a whopping $5.4 billion. Additionally, Zomato also plans to launch its Initial Public Offering, which is projected to raise close to $1billion for them in June 2021, giving them a slight edge over the Bengaluru based competition.  

The Losses

The world learned of Swiggy’s latest development from an internal memo sent by the company’s CEO Sriharsha Majety to its employees. There are also talks of further investment deals in this stage of funding itself by foreign sovereign funds like GIC Singapore and the Qatar Investment Authority along with existing investors like Prosus (earlier known as Naspers) and Accel that will propel the total investment of the series J funding over $1billion.  

What is interesting in the story is that Swiggy managed to generate these investments after they posted an aggregate of 66% losses of INR 3909 Cr in the fiscal year of 2020. While their revenue grew at 129% (YoY) from INR 1292 Cr in FY 2019 to INR 2952 Cr in FY 2020, the overall expenses growth was 88% (YoY) to a whopping INR 6864Cr in FY 2020. The majority of the expenses went into employee benefits for the delivery executives and cultivating independent brands.  

In the memo Shriharsha Majety went on to explain the future goals and projections of the company. He talked about capturing the growing middle-class strata in India, which will grow to 500 million in the next 15 years.  Swiggy is involved in a heavy battle for territory with its Gurugram based competition Zomato. Zomato netted a revenue of INR 2486 Cr in the fiscal year 2020, while the latter’s expenses were comparatively lower than Swiggy.   

The reason Swiggy is still a very sturdy competitor is that it is solely a delivery company with its entire focus towards deliveries. Whereas Zomato started off and still is diversified into a restaurant rating and curating company.  

Better Than Zomato?

Also, Swiggy seems to have its expenses and profit loss margin in better check than its rival Zomato; combined with its growing trust in the gen z and the millennial user base, it has immense potential to give big exit returns to its old and new investors. Swiggy also introduced its new virtual convenience store feature called Instamart that enables you to buy and get groceries delivered just like food, without any hassle. This is an additional feature on top of its ‘Swiggy Genie’ that facilitates the exchange and delivery of personal packages in a city.  

While the most successful startup sector that boomed in the FY 2020 was fintech, Zerodha, an online brokerage firm that disrupted India’s brokerage market, became a unicorn in 2020, attaining a valuation of $1billion.  

Swiggy seems to have its expenses and profit loss margin in better check than its rival Zomato;

Other Startups

  •  Nykaa, in the beauty and wellness industry, attained its unicorn status in the past year. Apart from these giants, other new and well-established startups were heavily funded in the past year. Some of them are: 
  • Cars24: This startup in the transportation industry received total funding of $193.8. It has streamlined the process of selling used cars online with a very simple process of inspection and selling the car upon approval.  
  • Meesho: Meesho received total funding of  $215.2 Million. It is established in the e-commerce sector and facilitates the reselling of products with ease.  
  • Blackbuck: A logistics selector startup that provides a platform operational facilities and an online platform for the trucking services along with fleet management received overall funding of $297 million.  
  • Inmobi: An enterprise software that provides cloud-based marketing services to businesses raised a total of $320 million in funding.  
  • BYJU’s: An established giant in the educational sector that provides competitive education, including targeted exam prep courses like the NEET, GRE, GMAT, managed to raise total funds amounting to $1.4 billion.  

Recounting these recently funded startups is barely scratching the surface of the Indian startup ecosystem, with new unicorns and tech companies being born everyday. The pandemic managed to halt and affect the operations of businesses across the country, but the tech industry, especially the startup culture, never stopped booming, propping up the Indian economy on its shoulders and back on track of the marathon; to becoming a $5 trillion economic powerhouse.   


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