Ola gets $500 million fresh investment
India’s largest cab hailing service Ola has raised $500 million in fresh funds from new and existing investors as it seeks to expand its market share and fend off competition from closest rival Uber.
The company, run by ANI Technologies Pvt. Ltd, said on Wednesday that it raised the money from investment management firm Baillie Gifford, China’s largest taxi-hailing service company Didi Kuaidi and existing investors Falcon Edge Capital, Tiger Global, SoftBank Group and DST Global.
Ola said it “will use these funds to further grow in the market and expand presence across existing categories as well as in innovating mobility solutions for the local market”.
Mint reported in September that the company had received about $225 million as part of a $500 million funding round—a deal it was expected to close shortly and could have valued the firm at nearly $5 billion.
With the current round, Ola has closed over $1.3 billion of external funding, of which over $1.2 billion has been raised over the past year. In April, Ola raised $400 million in a funding round led by DST Global. In October 2014, Japan’s SoftBank Group led a $210 million funding round.
“The round took longer than expected but Ola can now breathe a sigh of relief as there was lot riding on this investment for the company,” said Kashyap Deorah, author of The Golden Tap, an upcoming book on India’s hyper-funded start-up ecosystem.
“I am surprised that Didi Kuaidi did not make a decisive move earlier in the year when it announced an anti-Uber conglomerate in New York and even now it hasn’t led the round,” added Deorah, who has been an angel investor in India and Silicon Valley.
Other investors in Ola include Matrix Partners, Steadview Capital, Sequoia India and Accel Partners US.
“As we pursue our mission to build mobility for a billion people, we are excited about bringing on board partners who can help us get there faster. We will continue to build for the local market through innovative solutions like Ola Share, Ola Prime and Ola Money, as we grow the mobile ecosystem in India,” said Bhavish Aggarwal, co-founder and chief executive of Ola.
Founded in January 2011 by Indian Institute of Technology Bombay alumni Aggarwal and Ankit Bhati, Ola (formerly Olacabs), claims that it has grown by over 30 times in the last one year, and now logs over one million booking requests a day. Ola’s platform has over 275,000 cabs and 75,000 auto-rickshaws, apart from kaali peeli taxis and yellow taxis in 102 cities in India.
Over the past year, Ola has launched a food delivery service—Ola Café—and an independent grocery-ordering app called Ola Store, taking a cue from the strategy Uber is adopting elsewhere in the world. Uber already delivers groceries, food and e-commerce products in the US.
The firm also aims to be a one-stop transportation solutions provider; hence after cabs and auto-rickshaws, the firm has rolled out shuttle bus services by on-boarding chartered and tourist buses on its platform.
Earlier this month, Ola also announced its entry into the mobile payments business with the launch of a dedicated mobile app, a move that will put it in direct competition with Alibaba Group-backed Paytm and Snapdeal-owned FreeCharge.
Ola Money allows users to recharge their mobile phones and send money to friends and family. The company also plans to expand services to payment of utility bills and add more partners on the platform, including e-commerce firms and food-ordering sites.
In July, San Francisco-based Uber, currently the world’s most valuable start-up at $51 billion, said it would invest $1 billion in India within 6-9 months.
Uber, a distant second to Ola, claims to be growing 40% month-on-month in India and expects to clock more than one million daily rides by the end of the current fiscal. It has introduced certain India-specific measures to suit its business to the local market. These include cash payments and low-cost services.
Ola bought smaller rival TaxiForSure in a $200 million deal in March to increase its lead over Uber, and now claims to have an 80% market share.