Swiggy in discussions to raise fresh capital of $50 million

Swiggy, the online food delivery startup, is in talks with South African media company Naspers and Chinese conglomerate Fosun International to raise fresh capital of $50 million in a bid to overshadow its major competitors Zomato and Foodpanda. The company had till now raised $75 million from investors including Accel Partners, Bessemer Venture Partners, Harmony Partners, RB Investments, Norwest Venture Partners, SAIF Partners and Apoletto.

Swiggy currently operates in 8 cities in the country, and is also piloting its own kitchens in Bangalore. Though it has ample cash in reserves, still the startup wants to buffer its war chest to compete with the other competitors as it seeks to grow its business and profits simultaneously.

Food startups are the worst hit category after a slowdown in the funding from investors citing profitability concerns. It forced firms to curtail their expansion plans and stop providing huge discounts and offers to the customers, and instead focus on reducing costs and improving profitability. This led to shutting down of startups such as Dazo and Eatlo, while the big ones (Zomato, Foodpanda, Tiny Owl etc.) curtailed their expansion plans and focusing more on generating profitable revenue.

The startup had reported ~65-fold increase in losses during FY16 reflecting heavy cash burn in the food delivery space. Though Swiggy has clawed back some of those loss areas by charging the customers additional fee for low price orders, and extra commission from the restaurants.