Ola, the ride share cab operator is in the process of shoring up its finances as part of its J Series fundraising. The company had mentioned earlier that it seeks to raise around $1 billion in this round and in the latest effort, Rs 112 crore has come from a bunch of investors from USA. You may recall that the previous amounts received under the same series fundraising programme were Rs 150 crore from Sachin Bansal and Rs 520 crore from Steadview Capital.
Ola is at the crossroads currently. In its core business of cab operations, it is being reported that the company has turned the corner and each of its rides is now making money. But the competition from Uber is far from over and Ola needs all the funding it can muster to keep the pressure on. And then it has opened up its operations in some other countries like Australia. These international forays will demand investments as well. In addition, Ola has plans to get into delivery of medicines and lending activities too. The $1 billion will go towards all these. It is learnt that though profitable, the ride share business is showing symptoms of a decline.
Olaâ€™s revenue has grown to Rs 2,223 crore, an increase of 62% over the previous year and the losses are Rs 2,842 crore. But the losses at this level are seen as a positive development due to a drop of 42% from the previous year.
It is worth mentioning that Ola, which is currently valued at around $5.7 billion, could have taken the $1 billion it needed from SoftBank Japan, an existing major investor in the company. SoftBank had even expressed its willingness to bring in the funds. However, the promoter of Ola, Bhavish Agarwal, wanted a more broad-based stake-holding to retain his hold over the company. This is how he roped in Sachin Bansal, the co-founder of Flipkart who has been independently fighting against foreign investors taking over Indian startups. Bhavish and Sachin have been friends for a long time.