Amidst rising protests from drivers in all regions, Ola, run by ANI Technologies Pvt. Ltd has been in talks to raise a $100 Mn funding round. Reportedly, RNT Capital Advisors, a $300 Mn venture fund set up by Tata Sons Chairman Emeritus Ratan Tata,will be leading this round, investing around $60 Mn. The remaining amount will be infused by existing investor, Falcon Edge Capital.
The Bengaluru-based cab aggregator was valued at around $3.5 Bn during its $350 Mn fundraise in February 2017. In 2015, the company was valued at $5 Bn after raising a $500 Mn round from Baillie Gifford, Falcon Edge Capital, Tiger Global, SoftBank Group, DST Global, and Didi Chuxing. In July 2015, Ratan Tata also made a personal investment in Ola and picked up a minority stake in the company.
Founded by Bhavish Aggarwal and Ankit Bhati, in January 2011, to date Ola has raised total equity funding of $1.5 Bn in nine rounds from about 20 investors
2016-17: Speedbumps On The Road
Since inception, Ola’s journey has not been easy. The company faced severe criticism on account of issues such as data breach, surge pricing, lack of transparency in billing systems, driver credibility and more.
Q4 2016 was the worst period, valuation-wise, for the ride-hailing app. In November 2016, investor Softbank slashed down its value close to $555 Mn, in combination with homegrown unicorn Snapdeal. Later, Vanguard Group also slashed the valuation of its stake in Ola’s parent firm, ANI Technologies Pvt. Ltd by over 40%. Softbank, furthermore, wrote off around $475 Mn in its combined shareholding value in Ola and Snapdeal, for the period ending December 31, 2016.
2016 also marked the shutdown of many verticals including ‘OlaCafe,’ and ‘Ola Store.’ Ola acquired TaxiForSure in March 2015, for over $200 Mn and later laid off over 1000 employees, amidst a severe cash crunch. Not only this, Ola also had to give up executives from the senior ladder including Head of Cabs Category Management, Pradeep Dodle; Associate Vice President of Products, Harsha Kumar; and VP of New Initiatives Sundeep Sahni. Also, in February 2017, Ola’s Chief Financial Officer (CFO) Rajiv Bansal and Chief Marketing Officer (CMO) Raghuvesh Sarup resigned from the company.
Prior to this, the Karnataka, as well as Maharashtra government, suggested new rules to level the competition between all cab operators in the state. Ola also faced strikes and ban threats from the Delhi Autorickshaw Sangh, & Delhi Pradesh Taxi Union and the Maharashtra taxi and auto rickshaw union, respectively.
2017 has not been much better for the online cab aggregator. Recently, in January 2017, Karnataka’s Transport department gave a three-day deadline to online cab aggregators, Ola and Uber, to stop their cab-sharing services in the state. Ola Share services were also deemed illegal in Karnataka, however later they were given 15 day extension to comply with the rules.
Demanding for better perks, accident insurance, and to be paid as per government sanctioned fare i.e. INR 21/km, among other things, the Sarvodaya Driver Association of Delhi called for a strike on February 2017. However, after the Delhi Government intervened in the matter, the strike by SDAD was finally called off on February 23, 2017, after 13 days. Similar strikes took place in Bengaluru and Chennai too.
Ola Vs Uber: The Battle Gets Fiercer
The homegrown unicorn currently holds 65% of the market share, with Uber running a close second. Ola is continuously striving hard to work in close association with state governments. Last month, it signed an MoU with the Madhya Pradesh government to create 25,000 entrepreneurs in the state. As per reports, Ola clocked about 6 Mn weekly rides on an average between September and December 2016, across all offerings—cabs, auto rickshaws and shuttle services.
The company recently also launched Ola Play – a platform which brings advance car controls, choice of personalised content and a fully-connected interactive experience for users on the move in Hyderabad, after Mumbai, Delhi, and Bengaluru. Ola’s strategy is to leverage Ola Play for major differentiation against Uber, which does not have any sort of in-cab entertainment system in India at the moment.
On the other hand, Uber too is undergoing its fair share of troubles – from settling lawsuits to internal leadership issues. Whether it’s the infamous Greyball controversy, SVP Engineering Amit Singhal’s exit due to non-disclosure of previous sexual harassment allegations or CEO Travis Kalanick’s rant with an Uber driver, these escalating issues have led to investors questioning the leadership team of the $69 Bn-valued company.
In India too, Uber has been facing a rough patch lately. First, the battle against Ola was lost over a license issue in Karnataka, then UberPOOL was termed illegal in Karnataka, and this was followed by driver strikes in Hyderabad, Bengaluru, and Delhi over the issue of incentives.
Later, Uber India Head Amit Jain tried to set the record straight through a blog post, wherein he clarified issues around driver earnings and incentives and reiterated Uber’s commitment to the driver community and India for the long term.
Apart from the above mentioned $100 Mn, Ola is also in talks to raise another $200 Mn from other existing and new investors, to fuel its war chest against global giant Uber.
Email queries sent by Inc42 to Ola did not elicit a response at the time of publication.
