The VC firm will invest in the bracket of $500,000 to $5 million in startups that can create “disproportionate value.”
Unicorn hospitality startup OYO’s Ritesh Agarwal has started an early-stage venture capital firm called Aroa Ventures based in Singapore. The venture firm has been launched in partnership with the COO of OYO’s coworking business Innov8 Gaurav Gulati, according to the company’s website. The VC firm will invest in the bracket of $500,000 to $5 million in businesses that can create “disproportionate value.” The website read, “We believe that the long-term environment will always be favorable for making value-add investments in companies with proven unit economics and high potential to scale.”
Gulati had no immediate comments. OYO also declined to comment on the development.
Agarwal and Gulati will back startups that already have annual revenue of $1 million to $10 million with a growth of over 20 per cent year-on-year and “proven unit economics”. The firm will back startups in three sectors – consumer, technology, and leisure infrastructure.
Foray into the venture capital landscape by Agarwal comes amid the company’s recovery in the post Covid world. OYO started to resume operations last month with its ‘Sanitized Stay’ campaign as a confidence-building measure among travelers who have restricted or postponed their travel plans for this year.
Covid struck SoftBank’s star portfolio company around two months after it undertook the much talked about restructuring exercise in January that saw around 5,000 people being fired from its China, India, and the US offices and exit from around 200 cities in India. In April, it reportedly furloughed thousands of employees in the US and other markets for two-three months even as Agarwal said that Covid has cost around 50 per cent – 60 per cent fall in business revenues.
Nonetheless, its India and South Asia COO Gaurav Ajmera in June claimed that the recovery for OYO will be faster from the current situation than other chains. “From an industry perspective, recovery will be a function of demand type and asset type. Businesses will see a U-shaped to a V-shaped recovery, whereas, leisure will see a prolonged U-shaped or swoosh-shaped recovery. This can be seen in China which as a country has shown very positive signs of recovery,” Ajmera had said.
Even as the extent of overall recovery so far for OYO is yet to be known, majority hotel businesses don’t see growth for at least the next one year. According to a JLL survey out earlier this month, 60 per cent hotel operators surveyed said that it would take 13 to 24 months for their portfolio to bounce back to 2019 RevPAR (revenue per available room) levels. 53 per cent of leading hotel operators had closed over 80 per cent of their inventory amid lockdown.