US-based investment management company Invesco has cut Swiggy's valuation for the second time this year, reducing it by less than half to $5.5 billion. The U.S.-based investor had valued the food delivery company at $10.7 billion in January 2022 and $8.2 billion in October 2022.
Invesco's regulatory filings with the U.S. Security and Exchange Commission (SEC) showed the investor valuing the Swiggy shares at $3,305 as of January 31, 2023, less than $4,759 in October 2022.
With this development, Swiggy's valuation has dipped close to its rival, Zomato, whose m-cap stands at $6.3 billion, as of May 9. Major investors of Swiggy include Prosus Ventures, Accel, and SoftBank, among others.
The markdown in Swiggy's valuation comes amid a recent cut in the valuation of homegrown ed-tech major BYJU's by New York-based investment company BlackRock, which lowered its valuation by around half to around $11.5 billion.
Swiggy saw its losses more than doubling during the last financial year even as the firm’s revenue grew over two-fold. The net loss of the food tech unicorn widened to ₹3,628.9 crore for FY22, against a loss of ₹1,616.9 crore in the previous fiscal, weighed down by a sharp spike in expenditure.
Swiggy, which is competing fiercely against Zomato’s online delivery platforms Blinkit, Zepto, and BigBasket, has been investing aggressively to expand its offerings, including the instant-delivery service in the South Asian market.
Swiggy’s revenue from operations jumped 2.2 times to ₹5,705 crore during the fiscal year ending March 2022 compared with ₹2,547 crore in FY21, as per its annual financial statement with the Registrar of Companies (RoC). Segment-wise, revenue from rendering platform services grew 83.3% YoY to ₹3,444 crore, while revenue from sales of grocery and FMCG products surged nearly 4 times to ₹2,036 crore in FY22.
Swiggy, along with other startups, faces funding challenges amid a spike in interest rates by central banks globally to tame boiling inflation and fragile economic conditions. Investors are less willing to invest in companies that failed to demonstrate healthy growth. At a $10.7 billion valuation, Swiggy last raised funding $700 million in a financing round in January last year, led by Invesco.
Pan industry, domestic start-ups raised $2.8 billion in 301 rounds in the January to March period in CY2023, according to the latest funding report by Traxcn. This is a decline of more than 75% year-on-year (YoY) as compared to $11.98 billion raised by domestic start-ups in 816 rounds in the same period last year.
Separately, Swiggy had recently launched a two-year ESOP liquidity program. As part of the planned ESOP liquidity program in 2022, Swiggy employees will have the option to receive liquidity of up to $23 million against their ESOPs.
