Foodtech startup has generated significant interest among investors and rivals lately. First, there were speculations that Flipkart was looking at an investment in it. Then came reports of Zomato exploring merger talks with its biggest domestic competitor. And now, fresh reports suggest that SoftBank might be lining up a $250 million investment in Swiggy. If successful, the deal would value Swiggy at about $650 million. Swiggy was valued at $400 million when it raised $80 million from South Africa’s Naspers Inc earlier this year.
The new deal might also see a co-investor in the form of China’s Tencent, which is likely to offer $50-100 million. SoftBank and Tencent had co-invested in another Indian startup in October. Both pumped in over $1 billion in Ola for a significant minority stake. In Swiggy too, SoftBank is looking at something similar.
Interestingly, Tencent’s Chinese rival Alibaba Group, which is heavily invested in India, is also said to have held talks with Swiggy and explored a merger with Zomato. Alibaba, meanwhile, is nearing a $200 million investment in Zomato that could value the latter at over a $1 billion, making it the first Indian unicorn in foodtech. Swiggy, on the other hand, is believed to have expressed interest in buying out Zomato’s food delivery business (Zomato Order). But the talks came to nought.
SoftBank, of course, has dismissed “speculations” over its investment. And a Swiggy spokesperson has said, “Swiggy garners continuous interest from investors due to our market leadership position, strong growth and financial performance. We remain focused on delivering exceptional value to consumers, and will comment on fund-raises at the opportune time.”
Swiggy and Zomato are vying for the top spot in foodtech. While Zomato is a bigger firm than Swiggy, the core of its business is restaurant discovery. On the food delivery front, Swiggy fulfills more daily orders as well as records higher transaction values. But Zomato is now ramping up its delivery unit; it acquired hyperlocal logistics firm Runnr in September “to have everything in the stack of building a delightful food delivery service – end to end – listings, discovery, reviews, ordering, and now, logistics”.