On Wednesday, the Mint reported that cab aggregator Ola has initiated talks with investors to raise a new round of funding.
The report quotes sources who said that the homegrown ‘unicorn’ wants to raise $300-400 million, but might have to lower expectations owing to the investors’ appetite. The company at present is talking to both existing and new investors including names such as Didi Chuxing and SoftBank Group.
The process would be similar to Ola’s last fund raise where the company, at first, may receive capital from existing investors and then close the round by adding newer investors to top up the cash. It was last November when Ola closed a fresh round of $500 million in funding from Baillie Gifford, China’s largest taxi-hailing service company Didi Chuxing and existing investors Falcon Edge Capital, Tiger Global, SoftBank Group and DST Global.
Till now, Ola has raised about $1.2 billion in investments so far. But it seems essential for the company to keep raising huge amounts of cash to fund its operations, especially considering the battle it is waging with Uber.
This year Ola has also put focus on its core business. Earlier this year Ola shut Ola Cafe and Ola Store, its food and grocery delivery services and introduced Micro in March, to deal with Uber’s competitive pricing.
But Uber is not far behind. The San Francisco-based company claims to have 40 percent of market share in India.
Media reports suggested in September that Ola was doing 750,000 rides a day across 100 cities. Uber claims to have 150,000 drivers on its network and was doing more than a million rides daily.
The funding also seems essential for Ola, looking at the massive $3.5 billion funding that Uber raised from Saudi Arabia’s sovereign wealth fund, valuing the company at $62.5 billion . On the other hand Ola's valuation is speculated to be about $5 billion.
Globally, Didi Chuxing (Ola’s existing investor) also raised a heavy round of $1 billion in May from iPhone maker Apple Inc, followed by a fresh round of $600 million from a Chinese insurance company this week.