Illustration: Chaitanya Dinesh Surpur
This February, Zomato fired the first salvo.The food ordering and restaurant discovery platform raised $200 million from China’s Ant Financial, which is valued at all of $150 billion. The round took Zomato’s total raised amount to $376 million.
It took just a few days for arch-rival Swiggy to respond. The three-year-old online food delivery startup raised $100 million from Naspers and Meituan-Dianping, China’s online food delivery-to-ticketing services platform that has recently filed for an IPO.
Cut to June. Swiggy again raised $210 million, taking its total funding to $469 million. Zomato, according to people close to the development, is now set to raise another $400 million from Ant Financial.
Backed by deep-pocketed global investors, tit-for-tat rounds of funding are back. And funders are once again flirting with foodtech, which had become a graveyard for startups a few years back.
A recent report by HSBC predicts cash burn to intensify as the top two slug it out. “We clearly see room for two players… we are not sure if the market can accommodate three or more,” it predicted. UberEATS and Ola-owned Foodpanda have also jumped into the fray.
The pressure to spend, reckon venture capitalists, becomes intense when there is a direct competitor. “If a rival quadruples its spend and is aggressively going after market share, it’s difficult to not follow suit,” avers Sid Talwar, partner at Lightbox.