India’s biggest e-commerce company, Flipkart, is set to invest $50 million into Bengaluru-based food delivery firm Swiggy. The duo has been in conversation over the latest round of funding for the last month, and an end to the discussion is in sight, according to three people with knowledge of the deal.

Tencent is also keen on investing in the foodtech company and may follow Flipkart in this deal, which will take the round size to $100 million.

Swiggy has raised $156 million so far. Just behind Zomato, which has raised at least $223 million. As you are reading this, there’s another $200 million in the post for the Delhi NCR-based company, that is, if the deal goes through.

Typically, this is where the story ends.

But there is more to this deal than Flipkart being flush with funds and looking for something to do with its money. Swiggy is one of the hottest companies in the country. It pulls in 4 million orders a month. It just managed to raise $80 million from South African media conglomerate Naspers Limited and other VC funds. The company has enough cash, according to employees within the company. At least enough for 18 months runway. In the last couple of years, Swiggy has opened up new avenues for making revenue: cloud kitchens and advertisement. It means with the exception on restaurant discovery, Swiggy does everything that Zomato does.

So, why now?

Foodtech may not be the flavour of the month like it once was in 2015, but it is still a sector that attracts significant attention. In India, from 2015-17, the sector raised $800 million, and then there is Zomato, which is just one company and is potentially valued at $1 billion today. Swiggy is the next big bet in the sector.

The Ken reached out to both Flipkart and Swiggy, and emailed a detailed questionnaire. Both refused to comment.

Open sesame

In a typical venture investment, the VC looks at a company and sees the potential for a six-time or eight-time return in six to eight years. There is not a lot to analyse. But this is a different deal. It is unique when you realise that this isn’t just Flipkart seeing an opportunity to make money, there is more. Flipkart sees an opportunity to build an ecosystem, become an internet company with e-commerce at its heart. The reasons for Flipkart trying to bet big on Swiggy are many. What’s more interesting are the reasons that make Swiggy lean towards Flipkart.

Flipkart as a store and Flipkart as a company are different entities.