Zomato and Swiggy, among the largest food technology companies in India, are planning to raise new capital through investors as they look to tap into renewed investor interest and growth in the food technology space. According to reports, both companies will look to raise between $200 million and $400 million each. It is also believed that financial firm Coatue Management is leading talks with both organizations, and is looking to invest some amount in both companies.
It is believed that both companies have enough capital and funds for the time being, but will look to capitalize on investor interest right now. Investors are currently believed to be bullish about the food technology and online ordering industry, and both companies could look to raise large amounts and strong valuations without significantly diluting their ownership bases. ET reported last week that Coatue Management itself is likely to invest between $50-100 million in Swiggy. Zomato, being the older and more stable operation, could raise more than Swiggy in this round.
The online food ordering industry has seen significant moves by major players in the last couple of years. Apart from Swiggy’s strong growth and market share capture, Zomato has also taken the natural step of expanding from its restaurant listings business into the field of online food ordering. Zomato uses its vast network to enable food ordering and logistical support to restaurants that want the wide reach of its online ordering platform. Meanwhile, Swiggy has also grown strongly in key markets in India, particularly in the big metros.
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The space is fairly crowded though, with Uber having launched its UberEats food delivery service last year, and Ola acquiring Foodpanda India. The two taxi-aggregation services have shown interest in the online food ordering and delivery platforms, since both can leverage their taxi-hailing technology and apps to naturally progress into the food delivery space. The industry is growing rapidly as more users find it convenient to order food off an app. This gives users the ability to select from the entire menu easily, and place orders without having to talk to a person. Additionally, it allows for online payments, as well as allowing for the food to be paid for in advance.