Following the capital inflow of USD 42 billion in the India startup ecosystem last year, large Indian startups continue to cash in on strong investor sentiment, landing big fat checks from global VCs and PEs.
Food delivery giant Swiggy, on Monday, said it has raised USD 700 million in a new funding round led by American independent investment management company Invesco. Aside from Invesco, a slew of new investors including Baron Capital Group, Sumeru Venture, IIFL, Sixteenth Street Capital, Ghisallo, Smile Group, and Segantii Capital, among others, also participated in the round. Swiggy’s existing investors Alpha Wave Global, Qatar Investment Authority, ARK Impact, and Prosus chipped in as well.
With the latest financing, the Bengaluru-based firm has almost doubled its valuation to USD 10.7 billion, a report by local media Economic Times said, citing sources.
“While the food delivery business has nearly doubled in gross order value (GOV) in the last year, this fundraise will enable Swiggy to further accelerate growth on the core platform and make meaningful investments to grow Instamart,” the company said in a statement.
Instamart is an express grocery delivery service Swiggy launched in August 2020 to deliver high-demand grocery and household goods to customers within 45 minutes. However, in late 2021, the company began shifting its focus to quick commerce—wherein companies pledge to deliver goods within 10–30 minutes after an order is placed. In December 2021, Swiggy said it would invest USD 700 million in Instamart to cut down the delivery time to 15–30 minutes, in a bid to strengthen its position in the country’s emerging quick commerce segment. Instamart service is currently present in 19 cities.
Instamart remains well-positioned to lead the emerging quick commerce grocery space and is set to reach USD 1 billion in annualized gross merchandise value (GMV) in the next three quarters, as per the statement.
The company will also make investments in the broader hyper-local ecosystem. Apart from food delivery and express grocery, Swiggy offers package pick and drop service, meat delivery service, and morning milk delivery service.
“Our goal is to make Swiggy the platform that 100 million consumers can use 15 times a month,” said Sriharsha Majety, CEO of Swiggy. “We will continue to invest in our people, products, and partners to create a positive impact on the ecosystem and accelerate the digital transformation in food and grocery delivery and other on-demand services.”
Separately, Ola Electric, the EV arm of cab-hailing giant Ola, has landed another USD 200 million check from Tekne Private Ventures, Alpine Opportunity Fund, and Edelweiss, among others. The latest round values the company at USD 5 billion, the company said in a statement on Monday.
The latest round comes barely four months after the company raised USD 200 million from Falcon Edge and Softbank at a valuation of USD 3 billion, to fuel its electric vehicle manufacturing plans. In December 2021, Ola Electric received USD 52.7 million in a financing round led by Temasek and IIFL at a valuation of USD 2.7 billion, as per the local media reports based on regulatory filings. The company didn’t make any official announcement regarding this funding. To date, the company has raised over USD 860 million, as per the data from the business intelligence platform Crunchbase.
The development comes at a time when Ola Electric is facing flak from consumers for sustained delays in deliveries of its flagship electric scooters, Ola S1 and Ola S1 Pro. The company opened up a two-day window for booking of its two-wheeler EVs in mid-September 2021 and claimed to have sold nearly USD 150 million worth of e-scooters, which translates roughly into 100,000 orders.
Deliveries of these e-scooters were supposed to begin in October 2021 but kept getting delayed. Ola Electric reportedly cited the ongoing global shortage of chipsets and electronic parts as a reason for the delay.
By late December, the company finally started sending EVs off to consumers. However, many buyers complained that the two-wheeler EVs were missing features like cruise control, hill hold, and navigation assist, among others. This further delayed the delivery of the rest of the e-scooters.
Earlier this month, Ola Electric said it would push out a software update to add these features to the electric scooters but the process may take three to six months to reach all the customers. Furthermore, the company halted the production of the Ola S1 till later this year so as to focus on manufacturing the premium S1 Pro model, since it has seen more demand. The company also asked those who booked the S1 model to upgrade to S1 Pro’s hardware by paying an extra INR 30,000, which angered the frustrated buyers even more.
Ola Electric was set up by Ola as an in-house unit in early 2017 and got spun off in March 2019 into a separate arm. Ola’s co-founder Bhavish Aggarwal holds a 45% stake in the company, while ANI Technologies, which runs the cab-hailing business under the brand Ola owns 10%. Ola Electric also counts Matrix Partners and Tiger Global as investors, aside from SoftBank.
Aggarwal started focusing on the group’s electric vehicles vertical after the COVID-19 pandemic shattered Ola’s core cab-hailing business in early 2020 due to the restricted mobility. In May 2020, during the peak of the pandemic when Ola’s revenues were down by 95%, Ola Electric acquired Etergo BV, an Amsterdam-based electric two-wheeler manufacturer, for an undisclosed sum, to become a full-stack manufacturer of two-wheeler EVs. Later in December that year, the company announced the establishment of an EV manufacturing facility in the Indian state of Tamil Nadu with an investment of INR 24 billion (USD 320 million).
Over the last 12 months, Ola Electric said it has built a 500-acre factory—dubbed by Ola as Futurefactory—which has a production capacity of 10 million units a year.