So, one of the platforms where you order food and grocery from went public in November 2024. 10 years ago, Swiggy was founded with a mission to deliver food, something even its competitor Zomato wasn’t doing at the time. Of course, over time, Swiggy evolved to, also, deliver groceries through Instamart, make restaurant bookings through Dineout, send packages through Genie and more. It may, also, soon be dabbling in medicine delivery in short periods of time. One might even call it an all-in-one digital convenience store.
Currently, its valuation is said to be about $12 billion with more than 112 million active users. On top of that, there’s a membership plan called Swiggy One, which offers user benefits across services, which might have helped with better transaction volumes and customer retention.
Revenue-wise, in FY24, Swiggy grew from close to ₹8300 crores to about ₹11,200 crores. Unfortunately, it’s not profitable yet, though, its losses reduced about 45% from about ₹4100 crores to around ₹3400 crores. A recently-introduced platform fee might have helped with that. Of course, Swiggy may continue to invest in customer acquisition and expand its quick commerce aspect. Though, the delivery space does have some competition with Zomato, Blinkit, BigBasket, Dunzo and more.
That doesn’t sound too shabby. And after making its stock debut in November 2024, it was reported that 500 of its employees are all set to become “crorepatis” with ₹9000 crore worth of ESOPs. This kind of IPO might might be a cool moment for the tech sector joining the IPO likes of Zomato, Paytm and Nykaa.
But, maybe, to get to this point of success, Swiggy might have had to become the capo of a mafia it has created. After all, the road to power might be built on consolidation, similar to how PayPal, Zomato, Flipkart or others might have done it. Success might not only fuel growth, but, also, create an ecosystem. This could be by former Swiggy folks starting something on their own that has become successful.
According to PrivateCircle, there are close to 50 startups under the Swiggy umbrella with a collective valuation of close to ₹6300 crores, creating about 4500 jobs. Those numbers might even be higher, because not all of them might have had their valuations determined.
The Swiggy mafia is said to be active in software, media, finance, IT/ITES and more.
Swiggy was said to have held ESOP buybacks worth $4 million in 2018, $9 million in 2020 and $50 million in 2023. These are the kind of events that might have armed employees with the kind of financial freedom that would make them audacious enough to start something of their own and embrace high risk. The 2021 funding gold rush and the Shark Tank romanticization of startups, among other things, might have been additional inspirations. It’s said that about 35 of these Swiggy startups were incorporated between 2020 and 2023.
The Swiggy mafia’s created about 4500 jobs with Teachmint, Skillovilla, Avsar and VRO Hospitality creating a lion’s share of those jobs.
There’s, also, a level of disruption that each of the Swiggy mafiosi might have brought on. EdTech platform Teachmint has been described as the first AI-powered connected classroom tech. VRO Hospitality is said to have pushed the RestaurantTech space forward. Though, maybe, not every startup under the Swiggy umbrella might be a household name, but, as long as they’re out there solving problems, there might be some value in each of them.
It’s always interesting when there’s an entrepreneurial ecosystem that becomes increasingly self-sustaining.
It’s, also, interesting to pay attention to where these founders are coming from. Close to 20% of the founders in the Swiggy mafia went to IITs, while close to 10% of them went to IIMs.
Is it something to pay attention to that a lot of successful founders came from a small group of educational institutions? Is it correlation or causation? Or is there just a narrow funnel through which talent flows? Or could the mention of having gone to an IIT or an IIM sparked investor interest?
Sure, there could be employees from startups starting their own venture, but, along with capital, they may have some expertise in their domain, proven problem-solving skills and even have built some connections, unlike first-time founders who may not have operational know-how. That means fewer steep learning curves that might hamper the growth of startups in India. There’s a sense of operational discipline and an understanding of how to achieve scale, something that can be leveraged in a fledgling venture.
And just like Swiggy, some of the startups under its umbrella might be betting on visibility and brand loyalty to edge out the competition with an increase in advertising expenditure, maybe continuously at the expense of profits. The reach in Tier-II, Tier-III and Tier-IV might mean more of that spend. But, if the ESOP buybacks mean people leaving to create something of their own, it might be a tad bit worrisome, so the focus might change to creating better talent retention, especially as Swiggy continues to scale.
According to PrivateCircle, Swiggy’s workforce was said to have peaked in November 2019, though, there was a decline during the COVID-19 pandemic with a steady employee count of around 5000-6000. If the employee count doesn’t increase with revenue growth, could it signal that Swiggy might be operating more efficiently with a leaner workforce?
So, the successful listing of another high-profile loss-making and high-growth venture, like Swiggy, might encourage even more startups to tap into the public markets for funding and be embraced for it. Maybe, there’s been a sense of conservatism in the public markets with a preference for profitable companies, maybe, this is something challenging that notion. But, even then, there’s, already, been a focus on profitability by investors, especially with some of the funding winters that have emerged in the past recently. Just like a surge in entrepreneurs who were former employees of successful startups, there might even be a surge in angel investing, where successful employees or entrepreneurs might reinvest gains into promising new startups. So, it could be an interesting cycle of growth and innovation, who knows?
Could a startup’s next ESOP buyback become the turning point for new startups in India?
