The new year doesn’t seem to be Ola’s year. After run-ins with the government, devaluation by 40 percent and Softbank writing off $475 million worth of investments in Snapdeal and Ola, the cab aggregator is now beset with exits by top hires like Rajiv Bansal and Raghuvesh Sarup. The news of the two quitting was confirmed to YourStory by sources within Ola. They confirmed that Pallav Singh had moved up as the interim CFO following Rajiv's resignation.
Rajiv had joined Ola after a stint at Infosys -- his severance package has seen much debate lately. He was hired when Ola had raised its Series F funding of $550 million in 2015. The year seems to have brought in a lot of churn to our home-grown startups. In January, Kalyan Krishnamurthy came in as CEO of Flipkart, thus moving Binny Bansal to the role of Group CEO.
Between last year and the beginning of this year, Flipkart and Snapdeal have seen several top hires quitting and leaving. Flipkart also saw its fourth devaluation this year.
The US-based investment firm Vanguard World Fund has marked ANI Technologies Pvt Ltd, Ola’s Parent firm, by over 40 percent. According to their regulatory filing with the US Securities and Exchange Commission, the current valuation for Ola is now $3 billion. During their peak Ola had raised $500 million at a valuation of $5 billion.
The filing stated that Ola’s shares have dropped from $311.27 per share in the previous quarter to $182.7 apiece. Vanguard now holds over 166,185 shares of Ola valued at over $30.37 million. Media reports have been talking since late last year about Ola looking to raise $300 million funding.
After incurring losses trying to capture the Chinese market, Uber is selling its Chinese subsidiary to Didi Chuxing in a deal that values the combined entity at $35 billion. But as part of the deal, Didi will be making a $1-billion investment in Uber at an estimated $62-billion valuation.
In June 2016, Uber had raised a $3.5-billion funding round from Saudi Arabia’s sovereign wealth fund. Not to be outdone, Didi Chuxing announced that it had raised $7 billion, which included $4.5 billion in funds from multiple investors (including $1 billion from Apple, $600 million from China Life Insurance) and a $2.5-billion debt package from China Merchants Bank Co.
Uber gets a 20 percent stake in the combined entity of Uber China and Didi Chuxing. This will value the combined Chinese entity at $35 billion, up from its previous $28-billion valuation. The dynamics between Ola and Uber saw a perceptible shift after this deal, given that Uber had freed up all its resources for the Indian market. The cab market in India is growing exponentially.
It was following these developments that Ola started making claims of how capital dumping had come to seen as a measure better quality. Bhavish Aggarwal, Co-founder and CEO Ola has also said:
"Capital infusion is what pushes the impression of better service quality. That actually isn't the case. Uber's prices might be 15 percent cheaper than ours, but our higher market share tells market truths and realities. Having more money isn't the answer, the global companies come in and put in predatory prices, which isn't fair to the local markets and not even sustainable."
However, the year hasn’t been great for the blue-eyed boys of the Indian startup ecosystem. The valuation drop, according to the sources, comes at a time when Ola is allegedly looking for fresh infusions.
Jaspal Singh, Partner at Valoriser Transport Consultants, says “There is also talk in the market on the number of hacks that drivers use to game the system and create fake rides. Added to that, there is an increasing pressure for Ola to increase prices and focus on revenues. Internally, there is also a lot of pressure on the team to focus on their leasing out cars.”
Apart from this, Uber has been aggressively pushing into the India market, following on the heels of Ola, Uber launched uberHIRE on the heels of Ola Rentals. Also, according to sources, all of Uber China’s resources have been deployed to India. Also, if sources are to be believed, raising money for Ola isn’t happening that easily.