India has a big appetite for on-demand startups at the moment, and today one of the hopefuls in the food category has raised some money to supersize its business. Swiggy, a restaurant delivery startup that claims to be the largest in India after passing Rocket Internet-backed Foodpanda last month, has raised $35 million in a Series C round. The funding, which brings the total raised up to just over $53 million, included investment from SAIF Partners, Norwest Venture Partners, Accel Partners, Harmony Partners, RB investments and an “undisclosed global investment entity”.
CEO Sriharsha Majety, who cofounded the company with Nandan Reddy and Rahul Jaimini, told TechCrunch in an interview that the valuation is not being disclosed. We understand it’s well under $500 million but are trying to get something more specific, along with more detail on who the entity is and why the name is not being disclosed.
Swiggy is planning to use the new cash injection to expand its business in its home market, where the food delivery business is estimated to be worth $15 billion, it says.
Swiggy is live now in eight cities — Bangalore, Gurgaon, Hyderabad, Delhi, Mumbai, Pune, Kolkata and Chennai — but is still relatively small in size, with some 5,000 restaurants on its platform and approaching 1 million orders each month. The plan is to invest in hiring more engineering talent, expanding its platform and trying to crack delivery times, which today average at around 36 minutes.
Like Postmates in the U.S., the focus for Swiggy is on working with contractors to deliver food ordered on its platform. Today, they all use motorcycles but Majety said the company is now piloting bikes, too.
The bigger picture in India is that the growth of smartphones and a rising middle class keen to use them to make life more convenient is leading to a surge of on-demand commerce services to meet those demands.
But Swiggy is most certainly not alone in the market. In addition to Foodpanda, Ola, the very well-funded on-demand transportation app that is backed by Softbank and China’s Didi and is currently working hard to beat off competition from Uber in India, has been working on a food ordering service. Others include TinyOwl backed by Sequoia and Matrix, and Zomato, the online food ordering company that recently moved into delivery. And the focus on delivery also potentially puts it into competition with the likes of Grofers, which recently raised $120 million led by Softbank.
But not all is rosy with all food startups. Last month, Foodpanda laid off 300 staff, or about 15% of its workforce, amid competition from other players in the market. That potentially points to a lot of margin pressure for everyone active in the market, and perhaps a cooling down of an overheated market. Another startup, Dazo, stopped operations in October 2015.
Majety says that Swiggy charges around a 15%-25% commission to restaurants currently and for smaller orders it will charge extra to users, often between 20 and 24 rupees depending on the city.