SoftBank’s long drawn predicament over whether to choose Swiggy or Zomato to mark its first investment in India’s foodtech sector seems to have been finally resolved. If media reports are to be believed then Japanese telecom giant’s investment appetite are increasingly tilting towards to Swiggy, which leaves Zomato pretty much in lurch.
SoftBank is planning to invest nearly $300-500 Mn as part of the much larger funding round that is touted to be around $1 bn, people familiar with the matter claimed.
Sources further claimed that Japanese telecom giant decided to zero in on Swiggy as latter’s high market valuation was validated by South African investment giant Naspers. Swiggy’s ability to scale its business much faster than Zomato also decisively helped in tilting the wind in its favor.
Both Swiggy and SoftBank have so far declined to comment on funding reports. Both parties don’t want to rush things through as investment talks are prone to failure. However, sources also maintained that talks have reached advanced stage and therefore the chances of talks culminating into investment are very high.
With Indian foodtech sector proving to be a major fund guzzler, industry’s top two players have been chasing SoftBank for investment since August last year. The race became more intense after competition in foodtech sector increased dramatically following the entry of ride hailing majors Ola and Uber.
Although threat from Ola’s FoodPanda and Uber’s UberEats has subsided over the last few months, this has hardly diminished Swiggy and Zomato’s high appetite for fundraising.
Notwithstanding the obvious risk of high cash burn rate, both need sustained infusion of capital for increasing their market share and to remain continuously in the pole position. This pressure has meant that neither of the two companies can afford a complacent attitude towards fundraising.
