LIVEMINT: Less than two months after raising funds, both Swiggy and Zomato are in talks to raise more money, as investors queue up to back online food delivery start-ups, three people familiar with the matter said.
Swiggy (Bundl Technologies Pvt. Ltd) and Zomato Media Pvt. Ltd both have sufficient capital but the two companies are eager to add to their firepower due to strong interest from new investors, the people cited above said on condition of anonymity.
Swiggy and Zomato are in talks with at least three new investors each to raise more capital, the people said. Swiggy may raise as much as $200 million, one of the people said. Zomato may raise anywhere between $200 million and $400 million, the other two people said. The final amount raised by the two companies may change because the talks are at an initial stage.
In early February, Zomato had raised $150 million from Ant Small and Micro Financial Services Group, valuing the food-tech start-up at about $1.1 billion.
In the same month, Swiggy raised $100 million from existing investor Naspers Ltd and Meituan-Dianping, which runs an online platform in China offering a range of services including food delivery. Zomato has so far raised $375 million in equity capital while Swiggy has received $255 million, according to Tracxn, a start-up data tracker.
Swiggy leads the online food delivery stack with a 35-38% market share, followed by Zomato at 25-30%, according to RedSeer Consulting, an internet-focused consultant in India.
Last year, average daily orders at food-ordering start-ups soared to 450,000 from 200,000 in 2016, according to RedSeer. Bengaluru, Mumbai and the national capital region are the largest markets for food-ordering start-ups. Food delivery has become a particularly lucrative opportunity for start-ups as margins in the business are much higher than in grocery delivery or e-commerce. But with Foodpanda , Zomato, and Uber all spending heavily to catch up with market leader Swiggy, margins are expected to take a hit over the next few years.
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