Swiggy, a food delivery service, is in final talks to invest in Rapido, a Bangalore-based bike taxi startup. Swiggy's investment is part of a larger $ 150-200 million round of finance that Rapido is negotiating.

Swiggy will be able to boost its last-minute delivery capabilities and strengthen its speedy commercial goals as the investment arrangement continues. Swiggy's first bet in the mobility sector will be this funding.

Rapido, which began as a platform for bike taxis, expanded its vertical business-to-business operation by fulfilling Swiggy's orders through its riders. In addition, the company has entered the market for three-wheeler launch services in 26 locations.

While there are synergies that may draw a player like Swiggy from Rapido, which is essentially a shared mobility platform, the investment is currently solely financial in nature, with the food ordering business having no exclusivity.

Rapido has given investment bank JM Financial the task of organizing a fundraising after raising $ 50 million in August. The company's previous fundraising round was led by current investor WestBridge Capital, with participation from Japanese manufacturer Yamaha, and came following a year of Covid-19 pandemic hurting mobility players. Rapido was worth $ 235 million at the time.

Swiggy's possible investment in Rapido corresponds with the company's drive into fresh categories of food delivery. Swiggy recently completed what is believed to be a pre-IPO round, which explains the increased push on immediate deliveries and diversification.

Rapido currently derives 85 percent of its overall revenue from vertical rides, and that percentage is likely to remain constant.

Rapido's riders are largely part-time employees, and adding food service will help the company recruit full-time employees.

“Fundamental bike taxis and food delivery are very complementary in nature,” said Kunal Khattar, who heads a VC company Advantage and is an investor in Rapido. “As much as 80 percent of deliveries happen during lunch and dinner. What has happened is that there is low capacity in the mornings and evenings. Bicycle taxis are the opposite.”

Rapido’s riders are mostly part-time workers and by adding food service, the company can attract full-time staff. “The moment you can do that (both bid), you have an extremely powerful proposition to get full-time riders,” Khattar said. “Those who choose to work full time can earn up to Rs 20,000-30,000 per month.” He said that because Rapido ran on a light model for assets, unlike many of its rivals, the company was able to ride through the pandemic.