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Sequoia And Softbank Reportedly Team Up (Again!) To Pump $100 Million Into Oyo

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Despite company’s inability to meet even a quarter of its initial $400 million investment goal, Oyo Rooms has gobbled up $100 million from existing investors, reported the Hindustan Times. This is the fifth funding round for Oyo after raising about $125 million in four rounds.

The term sheet has been signed and the company is looking at expanding its operations domestically.

said a person with the knowledge of the deal.

The investors who participated in the current round include the existing ones — Japanese group SoftBank, Sequoia Capital, Lightspeed Venture Partners, Greenoaks Capital, DSG Consumer Partners and Venture Nursery.

These fresh funds will give a huge respite to Oyo, a brand which came up bright initially but has been struggling to keep up with its own pace of rapid expansion from just 3 cities at the beginning of 2015 to 165 at the year end. Oyo has been finding it difficult to raise fresh capital, largely due to declining investor sentiment, thus also affecting its ZO Rooms acquisition — a deal, though confirmed by Softbank in its earnings, but yet to be officially announced.

Capital infusion — as big as $100 Million (if true) — coming from current investors will go a long way in lifting external investment sentiment and might help Oyo reach at least half of its initial investment goal. We’ve mailed Oyo regarding the same, and a confirmation is awaited.

Moreover, after the initial meteoric rise and success of Oyo, rival companies such as GoIbibo, Expedia, MakeMyTrip, Cleartrip, Yatra have also stepped up their games. Goibibo and Makemytrip in particular, have raised a significant amount of cash themselves to expand their presence and even introduce budget hotel categories similar to that of Oyo.

GoIbibo recently revealed a 400% YOY growth recording over 1.6 Mn room nights for the period October to December 2015 (Q3), signifying its growing presence in the hotel industry.

Oyo currently has almost 65,000 rooms in 5,500 hotels across 177 cities on its platform. It has also launched its operations in Malaysia and is now looking for profitable operations in India.

With summers approaching and hence the official tourist season as well, these fresh funds will help the company attract more customers as well as to further expand its presence in other cities. More importantly, this capital will help Oyo continue running on the kind of burn rate it has brought itself to.


 

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