It looks like the power struggle to gain market share in the Indian food delivery business just reached epic proportions. With a massive 1.3 billion population, the world's largest democracy holds an unlimited scope for growth in the online food delivery segment. Just given the sheer size, this business could also have an impact on some of the NASDAQ and NYSE listed companies.
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Samsung Venture Investment Corp (SVIC) could invest upto $10 million in Swiggy
Zomato acquires Uber eats India operations in January 2020. Uber (UBER) now holds a 10% stake in Zomato.
Swiggy in talks with Samsung for Series I Funding
According to a publication in Economic Times, SVIC is in talks to fund the Bangalore based start-up Swiggy. Samsung Venture Investment Corp is the investment arm of Samsung Electronics that nurtures budding tech start-ups. If the talks succeed then Swiggy could see an inflow between $7 million to $10 million. Swiggy is currently valued around $3.6 billion and Swiggy’s Series I funding is led by the Proses. Proses is the International internet assets division fo the South African company Naspers. Now Naspers is one of the leading investor ins Swiggy after its $113 million investment in February 2020.
Crunchbase lists that Swiggy raised $1.6 billion in 11 rounds of funding. Since December 2017 Swiggy acquired four other Indian tech startups, all centered around tech and logistics. A publication in Business Insider suggested that Swiggy handles somewhere around 45 million transactions in a month, which is 60% market share by revenue. However, Zomato still retains the lead after acquiring Uber Eats customers in India with a 50%-55% market share.
The Zomato and Uber eats deal
According to an official release on January 21, 2020, Zomato announced its acquisitions for the entire Uber eats Indian operations. The purchase consideration was an all-stock compensation. The deal will confer Uber with a 9.99% stake in Zomato for $ 350 million. Zomato’s valuation was close to $3 billion in January when Alibaba Group’s investment arm, Ant Capital extended a $150 million funding.
Uber Technologies raised a record $8 billion in its IPO launch in May 2019. But since then the stock was a nightmare for investors. In 2019, the stock dropped -29% on a year to date basis and -14% from inception to date. The stock was in limelight as a poor performer on multiple instances. PayPal (PYPL), the online payment solutions provider, forecasted a potential loss in Q3 2019. At the time PayPal held a $500 million investment in Uber technologies which dipped by 34%.
Conclusion
Swiggy and Zomato collectively take up a lions share in the online food delivery space. The latest series of funding and acquisition deals could see a higher concentration in this market. The only thing that could potentially disrupt this sector in the future is when tech companies like Amazon decided to step in (remember Amazon’s Deliveroo in the UK?).
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