Ola to raise funds as its valuation lowers by 40%

Posted on November 26, 2016

Ola is India’s largest company in its booming cab – hailing business. But this month it has been valued at U.S. $3 billion, a 40% reduction from its previous evaluation of U.S. $5 billion. In the wake of a steep reduction in its valuation, Ola is looking to raise U.S. $400 million through funding from its existing investors like SoftBank, Tiger Global Management, DST Global, Accel Partners and Sequoia Capital. SoftBank said that it would fund Ola further this time, but would not lead the funding as it has reported an investment loss of U.S. $513 million this time. If the funding gets through, Ola would become the first Indian unicorn company to accept funds at a lower valuation. This is called down-round. It is raising this fund to compete with its nemesis, Uber. Ola currently holds the majority market share in the Indian cab – hailing business. Ola is the child company of ANI Technologies Inc. Ola is among India’s four most valued startups, alongside online retailers Flipkart and Snapdeal and digital payments operator Paytm.

Global funding for startups is slowing as investors have concerns about an increasingly aggressive Uber, the world’s most valuable and best-funded technology startup. Startups are generally reluctant to accept down-rounds because of how it could bring down the morale and the value of existing investors’ stakes. But a company that needs capital to continue its operations has little choice in the matter. Indian technology startups like Ola have raised U.S. $4.23 billion through investments during the three quarters this year. But that amount is only half of what they managed to raise last year (2015). But despite the devaluation, Ola continues to attract new investors. The Indian ride hailing business is valued at U.S. $10 billion this year. Uber so far has been stepping up its competition with Ola, via driver incentives and promotions targeted at Ola’s existing markets. In response, Ola is going to launch its all – in – one app, Ola Play next week to enhance its customers’ experience. Ola Play will allow Ola’s customers to change the music being played in cabs, change the radio station being played in cabs, will provide high speed internet (Wi – Fi) connection, alter the A.C. in cabs, alter the volume of the speakers and it will also have travel and entertainment apps embedded inside. This move is expected to enhance its customers’ experience significantly and is also expected to improve Ola’s market share in India’s booming cab – hailing business. It will give its nemesis, Uber, something to think about. Read more on Ola Play

Cab – hailing is very convenient for people indeed. People who are in other cities or towns outside their city/town of residence can travel cheaply to places using the economical Ola cabs. Ola provides a wide range of cabs for people of different economic status. Rich people, who are used to luxury travels, can travel by Ola’s Sedan class of cabs and people from middle and lower – middle class can travel by Ola’s autos or Micro class of cabs. They can change and enjoy the music or radio station provided in cabs as well as the high – speed internet and A.C. via the app Ola Play. People can save money by not buying expensive cars. They can use two – wheelers to do daily commutes and can hire Ola cabs in case they want to go on an outing with family or friends. It is a matter of pride for India that an Indian startup like Ola is able to compete with an MNC like Uber and is on India’s top four valued companies list. I request all of our dear readers and subscribers to hire Ola’s cabs instead of Uber as Ola will offer enhanced customer experience through its app Ola Play and also because Ola is an Indian company and Uber is an American company. I also sincerely hope that Ola will get funded adequately this time and regain its lost valuation and maybe even increase its valuation. Read more on Startup News