May 10, 2016: Food delivery startup, Swiggy has raised an additional Rs 47 crore from existing investors Norwest Venture Partners, DST Global and Accel Partners, valuing at over Rs 865 crore or $130 million, filings with the registrar of companies show.
The new funds raised gives the startup the horsepower to compete with other startups including Zomato and Runnr, to be formed after the merger of Roadrunnr and Tinyowl by going deep into its core eight cities and maintain its market leadership position.
Nandan Reddy, cofounder of Swiggy, in an interview on Friday said, “As the market leader, our goal is now to create defensibility around the brand with superior experience for both customers and restaurants”. But the founders refused to comment on the current funding.
Reddy explained that the company’s live order-tracking within the app, acceptance of orders without any minimum order size and ownership of fleet are its few differentiators which help them maintain customer repeat rate and differentiates the ordering experience from its competitors.
Operating in eight cities including Bengaluru, Hyderabad and Delhi-NCR, Swiggy is is fulfilling close to 40,000 orders. The company’s order value basket size has increased over the past few months to Rs 375 per order.Close to 30% of these orders are cashless.
“We charge our partner restaurants for both lead generation as well as delivery at 25% of the overall order,” said Reddy. The Gurgaon-based company said in its blog on Monday that it made 33,000 orders on Sunday, May 8.But Zomato claims that it is the largest player as it has a higher average order value of Rs 550-600.
According to Mukul Arora, principal at SAIF Partners, Swiggy’s offering is differentiated from its competitors, which helps the startup command a higher commission from restaurants and therefore build a sustainable business.
“A restaurant will pay Swiggy a commission for bringing the order, just like it pays other marketplaces, and in addition, it will pay Swiggy for delivery. Therefore, Swiggy’s revenue per order is significantly higher than other marketplaces, which focus on only one of the two aspects,” he said.
Swiggy had also raised $35 million (Rs 230 crore) led by internal investors SAIF Partners, Accel Partners and Norwest Venture Partners in the start of 2016.