MUMBAI (NewsRise) -- Indian food delivery service Swiggy raised $210 million from South Africa's Naspers and Hong Kong-based fund DST Global, as the online company beefs up its war chest to take on Alibaba Group Holding-backed Zomato and new entrant UberEats.
"With this investment, we will continue to widen Swiggy's offerings, along with bolstering our capabilities and plugging the gaps in the on-demand delivery ecosystem," Sriharsha Majety, chief executive of Swiggy, said in a statement. The latest funding valued the company at $1 billion, according to media reports.
The investment in Swiggy follows a $100 million funding it received from Naspers and Meituan Dianping, China's largest provider of on-demand online services, at the beginning of this year. The funding also marks strong investor interest in the online food delivery market in India where proliferation of cheaper smartphones and affordable data help boost internet usage.
Zomato had, in February, received $150 million from the payments unit of Alibaba Group in a deal that valued the online food delivery startup at more than $1 billion. Zomato is now in talks with its existing investors Ant Financial and Temasek to raise $400 million, at a valuation of as much as $2 billion, Mint reported Friday, quoting sources it didn't identify.
India's food delivery sector has been grappling with shrinking investments until recently amid reckless spending by start-ups to win customers. The sector is now witnessing a boom as new players such as ride-hailing firms Uber and Ola, as well as U.S. search giant Google entered the market. Last year, Uber launched UberEats in India, where the ride-hailing firm said it will deliver food using the fleet of cabs on its platform.
Soon after, rival Ola, owned by ANI Technologies, bought the local operations of food delivery start up Foodpanda from Germany's Delivery Hero, and said it will invest $200 million in the company. The year also saw the entry of Google, which started a food delivery and home services app in India called Areo.
For Swiggy, founded in 2014, however, the challenge is to maintain its lead against Zomato. In an earnings call with investors in May, Hitesh Oberoi, the chief executive of Zomato's parent Info Edge, said the company is "expanding aggressively on the delivery side of the business."
According to analysts, food delivery in India is likely to be a two-to-three player market, where Zomato is set to outperform Swiggy, thanks to its acquisitions and a classified platform.
Zomato, which started as a restaurant discovery service, entered the food delivery business in 2015 and has since fortified the operations through the acquisition of logistics company Runnr last year. The company has since been expanding at a faster pace.
In January, Jefferies said activity in online food ordering and delivery picked up sharply with the entry of large players like Google, Uber and Ola, and greater competitive intensity among incumbents like Zomato and Swiggy.
"Given the large number of players in the segment now, we believe consolidation is inevitable."
--Dhanya Ann Thoppil