Ola had been mulling over the decision to accept fresh funds at a lower valuation, since long back. And now, it seems that the funding round has finally through. The homegrown cab aggregator has finally raised $350 million in a down round led by its existing investor SoftBank and others.
With this round, the valuation of the company is now estimated at $3.5 billion from the earlier level of $5 billion. The last raise for Ola was in December 2015 when Vanguard Mutual Funds poured in $57 million at a valuation of $5 billion. But, it was also the first one to cut its valuation down by 40 percent earlier last year.
So far, Ola has raised $1.23 billion including the latest capital gain. The company has scored funding from multiple investors such as SoftBank, Tiger Global, Sequoia Capital and Matrix Partners. This funding round for the ride-hailing giant comes at a time when most startups have consolidated — cut back on operation costs and reduce burn rates due to lack of investments. But, Ola isn’t only looking forward to further expansion but also plans on introducing new technology upgrades to stay competitive against its arch-rival Uber.
The ride-hailing giant is presently battling against its driver partners across the country and has faced service bans in recent times. The aggregator is also in a ceasefire with the government, but amidst such chaos, fresh fund hails some relief.
The investments will be utilized towards driver training and incentives. It will be further channelized to upgrade the technology used and expansion of the services; which in turn will gain Ola more market share. On the other hand, Uber also has a plush bank account, thanks to the Middle East. The company raised a whopping $3.5 Billion from Saudi Arabia’s Public Investment Fund, about a year ago.
However, the lead investor, SoftBank wrote off close to $555 million in Ola and Snapdeal in company’s half-yearly earnings report. The company further reasoned out stating that gain or loss arising from financial instruments at FVTPL (fair value through profit or loss) comprises mainly changes in fair value of preferred stock investment including embedded derivatives. SoftBank, who has made an investment in the Indian startup ecosystem after long, is still to comment on the latest development and stimulation behind the investments in Ola.
While Ola posted a loss of ₹755 crores (in 2014-15) on revenues of ₹418 crores as per the latest available profit and loss details for the company. The company is also looking to expand its scope beyond cab aggregation, bike taxi services, and introduce van and minivan booking services on its platform.
