Oyo, the hospitality firm that includes a vast network of budget accommodations, has secured ₹1457 crore (approximately $175 million) in a recent Series G funding round, alongside a drop in it’s valuation. This round of funding was approved by 99.99% of shareholders at an Extraordinary General Meeting (EGM) on August 8, comes at a time when the firm is facing market headwinds and a sharp decline in valuation.
The Series G funding round saw participation from a diverse group of investors, including InCred Wealth, Patient Capital, J&A Partners, the family office of Mankind Pharma promoters, and ASK Financial Holdings. Serial investor Ashish Kacholia also contributed through InCred Wealth. The funding round also includes ₹416 crore ($50 million) raised from InCred in the previous month, bringing the total amount raised in this tranche to $175 million.
Oyo’s current valuation of $2.38 billion represents a dramatic decrease from its peak valuation of $9.6 billion in August 2021. This 70% drop in valuation is a stark reflection of the challenges the company has faced in recent years. Once valued at $10 billion and considered India’s second-most valuable startup, Oyo has seen its market worth fall below the total capital it has raised, which amounts to approximately $3.3 billion in combined equity and debt financing.
This decline in valuation comes at a time when there has been a similar market correction for tech-driven startups that saw inflated valuations during the tech boom of the late 2010s. Oyo’s sharp decrease in valuation has raised concerns among investors about the company’s ability to maintain its growth trajectory in a highly competitive and volatile market.
Despite the challenges, Oyo remains focused on leveraging the newly acquired funds to drive growth and expansion. According to reports, the proceeds from the Series G funding round will be used to fuel its global expansion efforts, including potential acquisitions and enhancements to its business operations. These strategic initiatives are crucial for Oyo as it seeks to strengthen its position in the global hospitality market and mitigate the impact of its declining valuation.
Oyo’s founder, Ritesh Agarwal, has expressed optimism about the company’s financial performance, highlighting that Oyo posted its first annual net profit of Rs 100 crore in FY24. This milestone comes after a year of steady revenue growth, with the company’s revenue from operations increasing by 14.3% to Rs 5,464 crore in FY23, up from Rs 4,871 crore in FY22. During the same period, Oyo successfully reduced its losses by 33.7%, bringing them down to Rs 1,287 crore. These financial improvements, while encouraging, have not yet been reflected in the company’s valuation, leaving investors cautious about Oyo’s long-term prospects.
The significant drop in Oyo’s valuation has also had implications for its plans to go public. The company has postponed its initial public offering (IPO) multiple times, most recently withdrawing its draft red herring prospectus (DRHP) in May due to unfavorable market conditions. Oyo has indicated that it will revisit its IPO plans once it secures additional funding, which is expected to follow the completion of the latest Series G round.
