In yet another indication of how investors are willing to bet big on the e-commerce space, Ola announced...
In yet another indication of how investors are willing to bet big on the e-commerce space, Ola announced on Thursday it had raised $400 million in an infusion led by Russian entrepreneur Yuri Milner’s DST Global.
New investors — Singapore’s sovereign wealth fund GIC and Falcon Edge Capital — and existing investors SoftBank, Tiger Global, Steadview Capital and Accel Partners also participated in the latest round of funding. Industry experts reckon Ola is valued at around $2.5 billion, close to online retailer Snapdeal, which was valued at about $3 billion when it raised $627 million from SoftBank last year.
Ola, which acquired rival TaxiForSure (TFS) for $200 million in a cash and stock deal in March, has earmarked $100 million to grow TFS’ presence in smaller cities. A big chunk of the funds will be used to beef up the technology platform and nurture the driver ecosystem, the company said in a statement. The company plans to be present in 200 cities by the end of the year up from 100 current year and localise its offerings beyond the existing set of mini, sedan, auto-rickshaws and taxis.
Ola had until now raised $277 million from SoftBank, Tiger Global Management and Matrix Partners, including a $210-million round from SoftBank last October, using part of that to acquire TFS.
Industry watchers peg the domestic radio taxi market at $6-9 billion with the share of organised segment at 4-5%.
Ola competes with San Francisco-based Uber and homegrown Meru Cabs, which recently raised $50 million from India Value Fund Advisors and is said to be in the process of raising another $100 million.
Bhavish Aggarwal, co-founder and CEO, Ola, said his firm would be able to cash in on the increasing smartphone penetration and growth in smaller cities and towns. “Our vision is that people shouldn’t find the need to own a car. And we have been able to make this possible for millions of customers in the past four years and creating over a hundred thousand driver entreprene-urs on the platform,” he added.
Ola claims it has about 100,000 vehicles, including auto-rickshaws in Bangalore, Delhi, Chennai, Pune, Ahmedabad, Hyderabad and kaali-peeli taxis in Mumbai as against Meru’s fleet of 15,000 taxis. It’s nearest competitor Uber is present in only 11 cities so far. While Uber recently launched auto-rickshaw services in Delhi, Ola followed by launching Ola Cafe, wherein the taxi aggregator would offer food delivery services on a pilot basis in Delhi, Mumbai, Bangalore and Hyderabad. The company has plans to launch other services in the logistics space in the months to come. Rahul Mehta, managing partner, DST Global, said, “Ola offers a strong value proposition for both users and drivers and is transforming personal transportation in India. We’re excited by their impressive growth and the potential to expand the platform into other categories and look forward to continue working with their visionary founders and management.”