1. Why services like Ola are getting preference over e-tailers in funding

Why services like Ola are getting preference over e-tailers in funding

Ola, India's leading online taxi aggregator, said on Wednesday it had raised $500 million via Series F funding, reports fe bureau in Bengaluru.

By: | Bangalore | Updated: November 19, 2015 12:45 PM
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In the first nine months of 2015, approximately .5 billion has flown into Indian internet companies, according to Jefferies, compared with .2 billion in the corresponding period of 2014, and surpassing the billion raised in all of 2014. (Rohnit Phore)mm

Ola, India’s leading online taxi aggregator, said on Wednesday it had raised $500 million via Series F funding, reports fe bureau in Bengaluru. Ola has now picked up $1.3 billion from investors, of which over $1.2 billion has come in over the past year. Following the latest infusion, Ola is estimated to be valued at $5 billion, joining the club of highly valued e-commerce firms like Flipkart ($15 billion), Snapdeal ($5 billion) and Paytm ($4 billion).

In the first nine months of 2015, approximately $5.5 billion has flown into Indian internet companies, according to Jefferies, compared with $2.2 billion in the corresponding period of 2014, and surpassing the $4 billion raised in all of 2014.

Services, which is the category that Ola belongs to, attracted 26% of the total money mopped up this year compared with 11% last year. In contrast the share of e-tailing — Snapdeal, Paytm, Shopclues — has fallen from 73% last year to 56% this year, while the share of classifieds — Zomato, Quikr — has gone down from 11% to 7%.

Against the backdrop of problems cropping up at several e-commerce companies resulting in layoffs and management changes, the fund-raising at Ola is an indication investors are willing to back ventures they believe are promising. “Investors will look for a scalable model and will be willing to wait for four or five years for the business to turn profitable, “ Pinakiranjan Mishra, partner and national leader, EY, told FE, adding that essentially they’re trying to pick potential market leaders.

Mukul Singhal, principal at SAIF Partners, says investors will support businesses that provide local services based on a strong smartphone platform. “We are keen to invest in companies that provide a market place for commerce around the home and on-demand services such as interior designing, beautification wedding planning,” Singhal said.

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