In a bid to fight a tough battle of survival amid the current scenario of dooming businesses due to countrywide lockdown, the Food delivery apps like Swiggy and Zomato in a bid to beef up its cash reserves, have accepted smaller cheques worth $5-10 million from the pool of investors to retain its market share in the segment. The infusion of this fund has come when the food delivery business is significantly hit with low order volumes.
Just a day before, Swiggy raised an additional amount of $43 million from Ark Impact, Korea Investment Partners, Samsung Ventures and Mirae Asset Capital Markets. The company has recently closed its latest $156 million funding round led by its existing investor Naspers, a South African firm. Swiggy's Rahul Bothra, Chief Financial Officer, informed about the company's focus will primarily be on its vision to build a sustainable path to profitability. Thereafter, Zomato claimed in regulatory filings last Friday that it had raised $5 million from Pacific Horizon Investment Trust, a fund managed by British investment manager Baillie Gifford.
In February, Ant Financial had led a $150 million investment round in Zomato at a pre-money valuation of $3 billion, according to a BSE filing by InfoEdge, an early investor in Zomato. However, only around $50 million of the committed corpus has come in from Alibaba’s affiliate till now.
However, the two food ordering platforms were about to close rounds of worth $400 million or more within the last six to eight months but were able to retain far fewer cheques due to the prevailing crisis. Due to this capital infusion, Their valuation has increased wherein Swiggy valuation comes at $3.6 billion and Zomato being close to $3.2 billion.
Experts inform that due to the current market crisis even drip funding would help. Uber India sold its business food business Uber Eats to Zomato earlier this year, while Ola-owned FoodPanda exited its food delivery business last year after deploying significant capital. While discounts were slashed down, across these platforms, commissions and new Uber India sold their business to Zomato at the beginning of the year, Ola-owned Food Panda had to exit from food delivery business altogether last year even after pumping in a significant amount of capital. The food delivery applications are in doldrums as the orders have decreased by more than 70%. The food delivery aggregators are trying every nook and corner to beef up during the crisis while adding more hygienic practices.