Swiggy cooks up $35m funding, proves India’s food startups aren’t toxic

In what might bring a fresh lease of life to India’s struggling foodtech startups, delivery app Swiggy today closed a fresh round of funding for US$35 million from new investors. The funding was led by SAIF, Norwest Venture Partners and Accel.

Swiggy’s latest round, the series C, comes about seven months from its last fundraising, when the company got about US$16.5 million from investors led by Norwest Venture Partners.

“We will focus on building up our current markets instead of getting to new markets, and focus on deliveries,” co-founder Nandan Reddy told Tech In Asia.

Nandan said the company will also invest in technology upgrades, helping partner restaurants to digitize and adopt new technology that will ensure smoother ordering and cut back delivery times.

Swiggy joins FreshMenu in turning the tide in an otherwise dismal sector.

However, the funding for Swiggy holds a deeper implication.

Investors in India have for months panned the model of food aggregation, where companies don’t own kitchens, but deliver food from partner restaurants.

Rivals Zomato, Tiny Owl, and Foodpanda have laid off employees and cut back operations, indicating a massive churn in the sector, and putting off investors.

Other players such as Spoonjoy, Dazo and Langhar have either been bought out or shut shop in recent past. As such, Swiggy’s run of luck will be one to watch closely. It has already started talking about profitability, the mark of a maturing company.

“While our focus will continue to be growth across all geographies, we will now concentrate on profitability and sustainability in established markets,” chief executive officer Sriharsha Majety said.