The Move Could Indicate Tiger Global’s Intentions To Exit The Ride-Sharing Venture
Lee Fixel, Partner at Tiger Global Management, has reportedly stepped down from the board of homegrown cab aggregator, Ola. As per filings with the Ministry of Corporate Affairs, the US-based investment firm currently holds a minority stake in Ola.
While the exact reason behind Fixel’s resignation remains undisclosed, it is believed to have taken place last month or earlier this month. It is also not clear whether any of Tiger Global’s representatives currently sits on Ola’s board.
An email query sent to Ola’s communication team did not elicit a response till the time of publication.
So, Who Is Lee Fixel And Why Is He Important?
An alumnus of the Washington University in St. Louis, Lee Fixel joined Tiger Global as a Partner in 2006. In the last decade, he has been the main driving force behind the firm’s private equity and venture capital operations.
In 2007, long before international investment giants Japan’s Softbank and China-based Tencent entered India, Tiger Global placed its bets on the country’s booming consumer Internet sector. Under the leadership of Lee Fixel, the firm led major funding rounds in home-bred ecommerce giant Flipkart, Ola and Quikr.
Apart from Ola, Lee Fixel also serves on Flipkart’s board of directors. Globally, some of Tiger Global’s biggest investments have been in Eventbrite, SurveyMoney, Facebook, LinkedIn, Glassdoor, Warby Parker and neighbourhood social network Nextdoor, among others.
Tiger Global And Its India Bet
Founded in 2001 by Charles P. Coleman III, Tiger Global manages $10 Bn in private equity/venture capital and another $10 Bn in publicly traded equities. The firm invests globally, with China, India and the U.S. being the most important markets at this point.
The firm marked its India entry in 2007 with $11.3 Mn (INR 77 Cr) investment in Just Dial. In 2008, it invested $5.9 Mn (INR 40 Cr) in offline coaching institute group TIME. Later, it also invested about $4.6 Mn (INR 30 Cr) in 2009 in JustDial and exited from the same in May 2015, for $64 Mn.
In 2015 alone, it made 38 investments in India with total disclosed investments of $1 Bn and each amounting to more than $5 Mn. The major ones included Ola ($400 Mn), Quikr ($150 Mn), Delhivery ($85 Mn), News In Shorts ($20 Mn), etc.
Apart from this, the firm has pumped over $1 Bn into Flipkart till date and held a 28% stake prior to the ecommerce giant’s last two funding rounds. In December 2016, it was reported that Tiger Global was in talks with Flipkart to participate in its funding round which could be up to $1 Bn.
As per another recent report dated March 2017, Tiger was in talks with SoftBank to ‘sell a part of its stake in Flipkart in exchange for a merger with Snapdeal. The report suggested that it was looking to divest a third of its shares in exchange for $1 Bn from SoftBank.
However in April, when the homegrown startup raised $1.4 Bn funding from Tencent, Microsoft and eBay, Tiger reportedly sold a part of its holding in Flipkart. Later in August, Flipkart secured another $2.5 Bn from Softbank Vision Fund, as an extension of the funding round in April. At the time, it was reported that a large portion of the investment was paid by Softbank to US-based hedge fund Tiger Global in exchange for one-third of its shares in Flipkart.
In the last two years, Tiger Global has slowed down its funding spree in India significantly. As a result, in 2016, it participated only in four startup funding rounds. As per sources, Tiger Global is still aiming to cut its India bets. According to a Business Standard report, till May 2017, Tiger Global invested $1.25 Bn in 101 Indian firms and managed to make seven exits, worth $473 Mn. This included Caratlane, Babyoye, Just Dial and a partial exit from MakeMyTrip.
Ola Growth Story: From 2011 To Present
Founded by Bhavish Aggarwal and Ankit Bhati in January 2011, Ola is currently present in 110 cities across the country. Its wide array of services includes online booking of auto-rickshaws and bikes, as well as vehicles. It has also come up with a connected car platform for ridesharing called Ola Play.
Till date, the startup has raised funding of $3.9 Bn in 11 rounds from about 20 investors.The funding round of $350 Mn raised in February 2017 took its valuation to about $3.5 Bn. Later in June, the cab booking platform reportedly picked up about $50 Mn funding from hedge fund Tekne Capital Management, as an extension of its ongoing round.
In October this year, the ride-sharing startup confirmed $1.1 Bn investment in a round led by Tencent Holdings Limited, in exchange for a 9.75% stake. In the official statement, Ola also revealed that it was in advanced talks with other investors to close an additional $1 Bn as part of the same financing round, taking the total fundraise to over US$2 billion.
Speculations about Tencent’s prospective investment in Ola first surfaced in July 2017, when it was reported that the Chinese Internet conglomerate was looking to provide the cab aggregator with the financial backing to compete against Uber and to help dilute investor SoftBank’s hold on the company. SoftBank currently holds over 40% stake in the company.
What Lee Fixel’s Resignation Means For Ola
Tiger Global has been on Ola’s board since March 2012, when it led a Series A funding round in the cab aggregator. Its last investment in Ola was made in November 2015, when it participated in a $500 Mn Series F round along with Baillie Gifford, Falcon Edge Capital, SoftBank Group, DST Global and Didi Kuaidi.
As of last year, Tiger held a 20.35% stake in the ride-sharing company, according to a VCCircle report. However, given that Ola has picked up massive funding to the tune of $1.45 Bn since then, it is likely that Tiger Global’s share in the startup has decreased significantly.
Consequently, in May this year, it was reported that SoftBank was in talks with Tiger Global to clinch its shares. At the time, it was stated that SoftBank was looking to buy Tiger Global’s stake in Ola for about $700 Mn.
Although the exact reason why Lee Fixel chose to step down from Ola’s board is not yet known, it more than likely indicates the investment firm’s intentions to exit the venture. If Tiger Global decides to sell its stake in the cab aggregator to Softbank, a merger with rival Uber could be in the cards for Ola, as hinted by Softbank Vision Fund CEO Rajeev Misra during a recent media interaction.
Update 1: 23 Nov, 2017; 11:00 am
A representative of Tiger Global’s media relations team offered the following clarifications:
- Lee Fixel is not an alumnus of the London School of Economics; he took a course there but is an alumnus of Washington University in St. Louis.
- Tiger Global manages $10 Bn in private equity/venture capital and another $10 Bn in publicly traded equities.
- The firm invests globally, with China, India and the U.S. being the most important markets at this point.
- Despite partial exits in Flipkart and Ola, Tiger Global still holds major stakes in both companies – and Tiger Global continues to have significant positions in a number of companies in India.
Changes have been made to the story accordingly.
(The development was first reported by VCCircle.)
