You have to hand it to Ritesh Agarwal. The 24 year old college dropout is out to make some serious waves. After first disrupting and consolidating India’s lodging market with Oyo Rooms, the entrepreneur has already set his sights on overseas targets. And as per the latest reports, he has raised a massive $1 Billion to fuel his plans.
With this latest round of funding, existing investors SoftBank Vision Fund, Sequoia Capital and Lightspeed Venture Partner have reaffirmed their faith in the company, pouring in $800 million and committing another $200 million. The round values Oyo at $5 Billion, which is pretty impressive for a company that is yet to celebrate it’s 8th birthday.
The company plans to leverage a very significant portion of this investment to gain a foothold in China. From what we hear, almost $600 million has been earmarked for China, where Oyo started it’s operations barely 10 months ago. In view of the massive Chinese market and strong competition, this massive warchest is liable to serve the company very well. The remaining money is expected to be pumped into expanding the company’s overseas presence, which is currently limited to a handful of countries including Britain, Nepal and Malaysia.
Speaking on the topic, Agarwal said:
With this additional funding, we plan to rapidly scale our business in these countries, while continuing to invest further in technology and talent. We will also deploy fresh capital to take our unique model that enables small hotel owners to create quality living spaces, global.
India and China has emerged as two key markets for businesses that depend on mass sales. With a combined population that numbers well over 2 Billion, capturing even a small percentage of the market in these two countries is almost certain to yield huge dividends. Luckily for Agarwal, Oyo was incepted in India and has already emerged as the leading player in the lodging space.
While strong competitors have emerged in India, most estimates put Oyo well ahead in the race – with some 125,000 rooms, and transactions tripling year-over-year as it delves further into tier 2 and 3 cities. In fact, it could well have been this stellar performance that prompted Softbank and et. al. to raise the size of their bets. Meanwhile, Oyo’s performance in India combined with it’s latest round of funding leaves Agarwal and team free to focus their attention on overseas destinations — and early indications bode well. In China for instance, Oyo has expanded to 171 cities with 87,000 rooms within 10 months of introduction.