Swiggy is an on-demand food delivery platform, operating in over 500 cities that brings food from neighborhood restaurants directly to customers ‘ doors.
The fundraise has raised Swiggy’s valuation to more than $4.9 billion from its previous ascribed valuation of $3.6 billion in 2020.
The next 10-15 years offer a once-in-a-lifetime opportunity for companies like Swiggy as the Indian middle class expands and their target segment for convenience grows to 500M (million) users over the period.
Swiggy which has approximately 60% share in the foodtech industry raised this round funding only weeks after its arch rival Zomato raised $ 250 million in its latest funding round and plans to go public this year.
Funding in Swiggy
Swiggy has raised $800 million in its latest Series J round of financing with Falcon Edge Capital, Amansa Capital, Think Investments, Carmignac and Goldman Sachs joining as new investors. Sovereign wealth funds Qatar Investment Authority and GIC of Singapore were also part of the financing round
Swiggy has raised a total of $2.4B in funding over 13 rounds by 23 investors out of which 11 of them are the lead investors of Swiggy.
The company’s business grew by 85% in the fiscal year 2019-20 with the addition of 100000 restaurants and over 2 lakh delivery fleet.
Swiggy’s revenue grew 129% year-on-year (YoY) from INR 1,292 Cr in FY19. During the same period, Swiggy’s total expenses grew 88% YoY to INR 6,864 Cr. As a result, the company’s losses grew 66% from INR 2,362 Cr in FY19 to INR 3,909 Cr in FY20
Indian food-tech aggregators are attracting investor interest, given the rise in demand for home delivery of food following the Covid-19-led lockdowns. Indian food-tech aggregators secured the second-highest amount of funding from investors in the first two quarters of FY21.
A cumulative investment of over INR 12.5 trillion in vehicle production and charging infrastructure would be required until 2030 to meet India ’ s EV ambitions.
Inspite of 2020 being a rough year for businesses, a few EV startups saw a rise.
Euler Motors raised INR 200 Mn from Inventus Capital India as a part of its ongoing Series A funding.
Yulu, the micro-mobility service provider announced in 2020 that Rocketship VC invested ₹300 million in the company.
TVS Motors acquired a stake of 29.48% in the EV startup Ultraviolette through a funding of INR 300 Mn
Ather Energy was the biggest funding recipient among Indian EV companies in 2020, with two huge deals raking in a total of INR 3.423 billion.
There was a whopping $571 Mn investment in the healthtech industry in 2018 in India. Technologies like ML, robotic surgery, telemedicine, nanotech, IoT, AI, robotics, 3D printing are examples of a few technologies that have paramount importance in the healthcare industry.
The 2020 pandemic situation has provided a boost to rise of several healthtech startups.
There are about 3,225 healthtech startups in India. They focus mainly on the accessibility of healthcare resources because the ratio of medical specialists to patients is quite imbalanced in the country.
Indian healthtech startups exist in divisions of pharmacy, home healthcare, diagnostics & biotech
Investments in the Healthtech Industry
Healthcare has become the hotbed for investments in India.
The total investments in healthtech startups in India in FY 20 over 141 funding rounds was $600 Mn.
In FY 20, 53% of the angel investments were towards healthcare.
In FY20, the number of angel/seed investments were at their highest as compared to venture capital, private equity and public equity with 57% of the total angel investments going towards healthcare technology sector till date. Q2 2020 saw 9 angel/seed deals in healthtech as compared to 3 deals being carried out in Q1 (2020), an increase of 3X.
It is evident that the new-age health-tech startups will define the post Covid pandemic world.
What was the deal between Jaypee & UltraTech Cements?
The deal was worth a whopping 3800 Cr
UltraTech Cement Pvt Ltd. took over the debt of Jaypee Cement worth Rs. 3650 Cr and issued fresh equity worth 150 Cr. The deal transferred all the cement operations of JCCL in Gujarat which consisted of units at Kutch, Sevagram, Wanakbori and other western regions to UltraTech Cement. The Gujarat Plant of Jaypee Cement had a 57 MW coal-based power plant and 30 MW diesel generator. The valuation of the plant would be approximately Rs. 7936 a tonne.
Impact on Jaypee Cements
Jaypee carried a debt of Rs. 56000 Cr on its books. The banks under pressure from RBI to get rid of bad loans insisted on selling off assets to pay the debt. The deal reduced the debt by Rs. 3650 Cr and helped to maintain the liquidity and reliability of the company. However, it lost a unit which was generating substantial cash flow.
The shares of the company were valued at just Rs. 6.73 and were getting traded as stocks. After the transaction the price of the shares rose to Rs 43.40
The deal reduced the capacity of Jaypee Cements to 33 Million Tonnes but it still continued to operate as the third largest producer of cement in the country.
Impact on UltraTech Cement
Ultra Tech greatly benefitted from the deal. Acquiring Jaypee’s units gave UltraTech a presence in the central and western regions where it lacked presence. Gujarat was strategically well-positioned too from an export point of view for UltraTech to explore new markets.
The deal helped UltraTech to establish itself as a market leader again. Its capacity, with the addition of 4. MTPA, to 59 MTPA. The market share of UltraTech increased from 17% to 21% as it was able to create synergies between its existing plant in Saurashtra and Jaypee ‘ s plant which was embedded with latest technology and could generate immediate cash flows.
What will Big Basket gain through the deal with Tata?
Big Basket has the largest market share in the Indian Online Grocery Shopping Business. It saw a tremendous rise in its number of customer in the Covid period.
With the entry of Jio Mart, the market has turned hyper competitive due to the strong backing of Reliance following the strategy of deep discounts. Jio Mart started catching upto Big Basket within a few months of its launch.
Big Basket in an effort to maintain its position of the market leader and to backfire at Reliance Industries Pvt Ltd. has sought this deal with Tata.
The deal will bring Big Basket the deep pockets of the Tata’s, experience in scaling up business and the industry name.
What’ s in it for Tata?
Tata’s will gain a majority share in India’s online grocery business thereby increasing their digital presence as the conglomerate is sensing a high growth in the e-commerce industry post Covid scenario.
The deal will help the launch of their “Super-app” which will give the consumers a single point of access for all services such as online fashion, groceries, medicines etc and bring all their consumer businesses under one roof for which the company is also planning to acquire stakes in the online pharmacy business 1mg.
Tata will be acquiring existing shares. This will lead to an exit of Alibaba which has backed the start-up through many rounds of funding and Abiraaj Group, both of which are the major stakeholders along with partail exit of some small stakeholders.
Soonicorns are start-ups which have a potential to reach the $1Billion Club or the Unicorn Club. In most cases, they’ve receivedfunding either from a Venture Capitalist or an Angel Investor.
Soon to be a Unicorn
Start-ups are rapidly rising to become Unicorns andSoonicorns due to the boom in consumerism and increasedadaption of digital services and products.
A majority of these Soonicorns belong to the FintechIndustry credited to the deep penetration of digitization anddidgital payments.
These Soonicorns are mainly based out of Bengaluru- Theestart-up hub, Delhi and Mumbai.
Venture Capital firms like Accel Partners, Sequoia Capital &Tiger Global have backed a majority of the Soonicorns.
A cloud kitchen is a delivery-only restaurant that has no physical space for dine-in.
One of the most lucrative part of the segment is the need for low capital investment, which leads to better management of funds and the ability to launch more than one brand using the same kitchen infra.
Cloud kitchens are benefited mostly because they do not incur high overhead costs which general restaurants usually do and can have an option to build digital brand awareness with that extra funds.
Since lockdown, cloud kitchens in multiple countries have had the opportunity to grow their customer base and business and help customers embrace social distancing norms.
The challenges this segment faces is high competition, since rivals tend to provide better offers and discounts to achieve customer loyalty, which leads torequiring steady amount of funds to attract the market.
Cloud Kitchen Market
Currently there are more than 317 cloud kitchens in India which run over 2000 internet restaurant in 35 cities
An individual looking to venture into the cloud kitchen market usually would have to invest approximately 1/3rd the setup cost of a regular restaurant setup. The profit margin in such setups varies in the range of 10-15%
Market Advantages in the Cloud Kitchen Segment
Millennials these days are more fitness conscious and tend to follow the trend of ordering ‘healthy’ food due to various reasons. Companies take advantage of such niche markets and change their strategies accordingly.
With increasing number of food lovers in across the globe, people try experimenting with different cuisines, which in turn has led to the increase in exotic and specialty-based restaurants.
Industry Analysis
The cloud kitchen segment is expected to reach $71.4 billion by 2027.
With a rapid growing CAGR of 12% (2021-2027), this segment focuses to deliver and serve food with emphasis on quality of food and hygiene.
Food discovery apps are the biggest boon for the industry since they provide a teaser of the dining experience.
Contact less services has become one of the most focused upon feature a user/customer looks at before they make their decision to order online. Integration of mobile payment platforms and other technology advancements make it easy to achieve these services.
There are more than 3000 startups in the food service industry, out of which more than 146 startups have collectively received $268 million of funding.
Zomato is an on-demand food delivery platform launched in 2008 with the name Foodiebay and is currently spread across 23 countries allowing individuals to order food or view various details such as ratings and reviews, ambience and their menu cards.
2012: Zomato expanded overseas and began offering its services in countries such as Sri Lanka, UAE, Qatar, South Africa, UK, Philippines and New Zealand, Turkey, and Brazil in 2013
2014: Zomato acquired Gastronauci, Poland’s restaurant search service, and Cibando, an Italian restaurant finder
In 2015 Zomato made its biggest acquisition and acquired NexTable and Urbanspoon
CovidImpact
Amid lockdown, Zomato laid off 520 employees (13%) and implemented salary cuts for remaining employees. By July their burn rate had sunk to $1-2 mn per month and delivery sales fell by 80%. This is just when global investors came knowing at their door with big cheques. Zomato and Swiggy were at their lowest while DoorDash and Uber Eats were at their peak during COVID, but Zomato played its cards right and acquired UberEats.
On New Year’s Eve 2020, Zomato recorded the highest sales with a GMV of INR 75 crore and OPM of 4254.
Two months after, DoorDash went public on NYSE in December, with a market capitalization over $60 bn, the same set of investors participated in Zomato’s fundraising round in February.
Expected IPO Details
As of February 2021, Zomato is valued at $5.4 bn
As of March 2021, Zomato is expected to file for IPO this year. The IPO advisers for Zomato are Morgan Stanley, KotakMahindra Capital, Goldman Sachs and Credit Suisse
Estimated to raise about $700-800 mm from its IPO, with IPO valuation pegged at $7-10 bn.
Zomato’s IPO would mark a milestone in the Indian startup ecosystem,making it the first unicorn form India to get publicly listed. This might set the playbook for other venture backed internet companies in India planning to get listed in the domestic market.
After the IPO, Zomato will be the most-valued company in the food service industry to be ever listed, surpassing Jubilant Foodworks($5.56 bn) and Westlife($1.06 bn).
Over the past year, Zomato has roped in half a dozen new investors including Fidelity, D1 Capital, KoraManagement, MiraeAsset, SteadviewCapital, and Luxor Group. These firms have collectively bought close to a 20% stake in Zomato.
The gaming industry in India is growing at a rapid pace. The gaming market in India is approximately 3.5 times more since 2016 and is expected reach the $1 billion mark this year, with a userbase of more than 628 Mngamers as of early 2021.
India being a budget friendly market stands among the top five mobile gaming markets in the world. According to the All India Gaming Federation, online gaming grew by 12% during the lockdown period in 2020.
More than 120 game development organizations have started operations in India giving a boost to the industry.
Factors such as high young population, availability of quality smartphones at low costs, relatively cheap data plans, large number if games tailored to cater Indian market and widespread adoption of digital payment methods are some of the key drivers for the market boom.
India is all set to become the industry leader of the modern world due to the increase in general interest and investment in the gaming culture. With proper nurturing and infrastructure, India has the potential to become the most advanced casual gaming development factory in the world.
Key Drivers for Market Growth
Users tend to purchase games and in-game content when they are tailor made to cater to the Indian market.
Excessive production and usage of low cost smartphones amongst urban and rural population has led to increase in consumer interest in gaming. Almost 75% of the market was dominated by entry-level or high end budget smartphones in 2015.
The internet penetration is expected to reach ~53% of population by late 2021.
The surge in the production of smart phones is accompanied by five times rise in internet data consumption.
Moving ahead with such a background, the industry is expected to gain momentum.
Investments in the Industry
Investment in the gaming industry grew by 78% to $173 Mn in 2020 compared to $97.1 Mn in 2019. The industry attracted $350 Mn venture capital investments between 2014-2020. With a growing CAGR of 22%, the industry is currently valued at $930 Mn and is expected to grow at 41% each year.
Reliance Jioannounced its support for “console-like” gaming with its setup box. Bharti Airtel and NODWIN Gaming, South Asia’s esportscompany, has announced a partnership in 2020 to further grow esports in India.
American game publisher RockstarGames acquired DhruvaInteractive; an Indian video game development company headquartered in Bengaluru in 2019. Later merged into RockstarIndia Studio and has around 500 employees in India.
Kolkata-headquartered online games platform Baazi Games (card-based games) plans to invest $5 Mnin India’s gaming market in 2020. Investment would focus on gaming start-ups to nurture the latest gaming technology.
Noida-headquartered ecommerce and payments firm PayTM and AlibabaGroup’s Hong Kong based AGTechHoldings formed a joint venture in 2018 to launch Gamepind – a localized platform hosting popular casual and sports games. PayTMinvested $8.8 Mn for 55% holding while AGTechHoldings invested $7.2 Mn for the remaining 45% shares.
In 2017, Vietnam-based game developer StomStudio has partnered with Indian game distributor and publisher, Gamesbond, to develop casual arcade games.
With dynamic and transitioning ecosystem acting as a catalyst, FinTechstart-ups have grown into billion dollar unicorns in the last decade. Global market value of FinTechtransactions is expected to reach USD 7 trillion by 2021.
India holds the highest rank globally in terms of FinTechadoption rate. Overall Indian market transaction value are projected to hit USD 140 billion by 2023.
As per NASSCOM projections, Indian software fintech market is set to touch USD 2.4 billion mark with transaction value of sector reaching USD 73 billion in 2020.
India acquired the position of Asia’s top FinTechMarket with total funding/investments of USD 647.5 million across 33 deals during Q2 2020.
Investments Wave in India
Razorpayjoined the coveted Unicorn club after a fresh funding round of USD 100 million in 2020. The platform is know to ease operations for MSMEs through accepting, processing and disbursing online payments.
PineLabs, one of the prominent pay later platforms raised USD 75 – 100 million at USD 2 billion valuation at the end of 2020.
Paytm’s parent company, One97 Communications raised USD 1.66 billion through two distinct transactions.
PhonePe, leading digital wallet company and one of the first UPI (Unified Payments Interface), has managed to tap investment worth USD 210 million.
PolicyBazaarmanaged to raise USD 282 million through two deals and USD 120 million through leading credit card payment services company, CRED.
