According to regulatory filings, Invesco, an investment firm based in Atlanta, has once again lowered the valuation of Swiggy, a foodtech startup, and now values it at $5.5 billion. This is a significant drop from its previous valuation of $10.7 billion in January of last year.
This action has been taken in the midst of a trend of top Indian startups experiencing decreased valuations, as investors remain hesitant to invest in them.
During the $700 million funding round in January 2022, Invesco assessed Swiggy’s value at $10.7 billion. Nevertheless, in October 2022, the investment company reduced the foodtech giant’s valuation to $8 billion, resulting in its shares being valued at $4,759 each.
The investment firm had previously reduced the value of its stake in the company to $8 billion.
According to Invesco’s filings as of January 31, 2023, the investment company possesses 28,844 Swiggy shares valued at $3,305.7 each, resulting in a total valuation of approximately $5.5 billion for Swiggy.
The recent reduction signifies a 50% drop from the $10.7 billion valuation that Invesco had assigned to Swiggy during the funding round.
Coincidentally, the valuation reduction has brought Swiggy’s valuation to a level comparable to its primary competitor, Zomato, whose market capitalization stood at approximately $5.45 billion at the end of Monday’s (May 8) trading session.
The reduction in valuation arrives during a period when the global economic slowdown has caused a significant decrease in the valuations of technology companies across the world. Consequently, several major Indian startups have also witnessed markdowns in their valuations in recent months.
BYJU’S valuation was reduced by nearly 50% to $11.5 billion by BlackRock, while Softbank lowered the valuation of IPO-bound OYO by 20% last year.
Despite offering more extensive discounts, Swiggy has struggled to keep pace with its publicly traded competitor, Zomato, which, according to analysts, has seized roughly 55% of India’s food delivery market. As a result, the Prosus and Softbank-supported foodtech startup has been unable to maintain its position in the market.
As a result, Swiggy has begun to branch out into other areas, such as the grocery sector. The foodtech startup has recently introduced Maxx, a platform that promises to deliver various items, including toys, electronics, gadgets, and home and kitchen essentials, in under an hour.
In addition, Swiggy intends to expand into additional categories like beauty and grooming, essential clothing, gardening, furnishing and decor, and health and fitness, thereby challenging the dominance of Amazon and Flipkart.
Swiggy has been actively discarding non-profitable business verticals lately. For example, it terminated Handpicked, a premium grocery vertical, a few months after launching its pilot in Bengaluru. It also divested its kitchen infrastructure business, Access, to Kitchens@ in March and discontinued its private label, The Bowl Company, in Delhi NCR towards the end of last year.
In addition, Swiggy had to restructure and consequently dismissed 380 employees earlier this year. The company recorded a loss of INR 3,628.9 Cr in FY22, which is 2.2 times higher than INR 1,616.9 Cr in FY21, as its expenses surged by 2.3 times to INR 9,574.5 Cr.