A Zomato Food deliveryman amid the Covid-19 lockdown in Gurugram on the outskirts of New Delhi, India, on April 7, 2020. Photo: NurPhoto

A world stuck at home in a Covid-19 lockdown ensures good news for the home delivery food business. Investors calculated so, despite the Covid-19-induced global financial market gloom.

They helped India’s largest food-delivery platform Swiggy hit the US$3.9 billion valuation mark with $43 million in funding.

Swiggy’s $43 million jackpot – when it was expecting ‘drip funding’ of $5 million – was in addition to its $113 million in funds already in its kitty for new ventures.

A deliveryman working with the food delivery app Zomato sits on his bike in a business district in Mumbai. Photo: AFP

Swiggy’s rival Zomato had also raised $150 million in January from Ant Financial, formerly called Alipay and an affiliate of the Hangzhou-based Alibaba Group.

Swiggy and Zomato have managed to find substantial slivers of silver lining amid dire anticipation of “the deepest global recession in generations,” as Asia Times reported.

India’s food delivery business is expected to be worth $8 billion by 2022, according to a Google and Boston Consulting Group (BCG) report.

“All key drivers are well in place,” said the Google-BCG report, “especially with India’s rapid advancement in internet adoption as well as continued investments behind consumer trials & delivery satisfaction.”

India’s largest food-delivery platform Swiggy, with a $3.9 billion valuation, looks to diversify. Photo: Courtesy Swiggy.com

The increasing online spending in India – particularly during these lockdown days – is expected to grow at 25% over the next five years to reach more than $130 billion, according to Rachit Mathur, Managing Director and Partner of BCG, Leader India Consumer & Retail Practice.

The new round of funding this month boosts Swiggy’s total funding to date to $1.42 billion, and increases it net valuation to $3.6 billion. Chinese conglomerate Tencent has contributed $19 million in the latest round of investments that Swiggy mentioned in regulatory disclosures in India.

Techcruch reported that existing investor Tencent and new entrants Samsung Ventures, Ark Impact, Korea Investment Partners and Mirae Asset Capital Markets have financed the new funding. This is in addition to the $113 million the Bangalore-based Swiggy raised from its biggest investor Prosus Ventures and others in February.

The latest chunk of funding is a healthy boost for Swiggy and Co in an economy ravaged by the Covid-19 pandemic.

 Swiggy and Zomato have dominated the challenging food-delivery market in India since Uber Eats quit the business in the country after sustaining reported losses of $20 million per month.

Uber Eats sold its India business on January 21 to Zomato in a deal estimated to be worth $300-$350 million.

Rahul Bothra, Swiggy Chief Financial Officer

Swiggy was in the news recently for its ‘Hope Not Hunger’ initiative, to deliver 500,000 free meals to the needy during India’s on-going 21-day lockdown expected to last until April 14.

Since 2019, Swiggy has expanded into general product deliveries under the brand name Swiggy Stores.

Both Swiggy and Zomato entered the grocery delivery business in the past week, a sunshine industry in a nationwide lockdown with millions of potential customers confined at home.

 “We are humbled by the faith shown by our investors year-on-year and welcome the new investors on board,” Swiggy Chief Financial Officer Rahul Bothra said in a statement. “Our focus remains to execute on our vision while building a sustainable path to profitability.”