Sachin Bansal, founder of Flipkart, has invested Rs 650 crore ($93 million) in cab hailing app Ola. This investment, which is a part of the ongoing Series J round, comes in at the same share price as the previous investment by Steadview Capital, at a valuation of around $6 billion. Bansal has made seed investments in nine start-ups so far, including Ather Energy, SigTuple, SpoonJoy, Unacademy, Plabro Networks, among others.
According to regulatory filings accessed by data intelligence platform paper.vc, the first tranche of investment was for an amount of Rs 150 crore to Ola. Bansal bought 70,588 preference shares having a face value of Rs 10, allotted at a subscription price of Rs 21,250 per share including a premium of Rs 21,240 per share. This investment follows the Rs 520.79 crore ($74.28 million) that Ola received last Thursday from existing investor Steadview Capital, taking Ola’s total fund raise in January 2019 to Rs 1,170.7 crore.
Since its bumper round in October 2017 - its largest fund raise to date of of $1.1 billion led by Tencent Holdings with participation from SoftBank and new US based investors, the cab hailing start-up has not been able to raise big rounds of funding. Instead, it raised several smaller rounds including two small rounds the same year in December 2017 and two more rounds in 2018. This is so, because Ola founder, Bhavish Aggarwal, decided to keep SoftBank at bay, say industry experts. SoftBank which has about 26 per cent stake in Ola had earlier attempted to forge a merger between Ola and arch-rival Uber, in which it is also an investor, which did not go down too well with Aggarwal.
Meanwhile, the cab aggregator market has witnessed a slowdown in growth over the last six months due to a supply-led challenge as cab drivers across the country went on strike to demand better earnings. Driver partner incentives have been plummeting over the last 24-36, as both Ola and Uber move towards the track to profitability.“From 20-25 per cent growth last year, growth in the cab aggregator market has dropped to 10-15 per cent in the last few months. While demand continues to be robust, there is a significant supply-side challenge of recruiting driver partners” said Anil Kumar, founder CEO of RedSeer Consulting.
Ola accelerated its international operations that was launched with the United Kingdom early last year with launches in Australia and New Zealand. The start-up’s diversification into the food delivery business with the acquisition of Foodpanda in December 2017 is not playing out as per plan said sources. “Despite pumping in $200 million investment into Foodpanda, Ola is struggling to compete with Swiggy, Zomato and Uber Eats, all of which have clear value propositions to offer customers. The huge discounts doled out by Foodpanda to customers during the festive season were badly executed with several complaints of order cancellations and untimely discounts from customers” said the same sources.