Ola Not Keen On $1 Bn From SoftBank, May Seek Lower Funding To Retain Control

Japanese conglomerate SoftBank is looking to invest $1 Bn (INR 7036.6 Cr) in ride-hailing company Ola’s next funding round, according to a media report citing people familiar with the development. However, Ola cofounder Bhavish Aggarwal may seek a lower amount in funding to avoid SoftBank from increasing its current stake of 26% in Ola.

Aggarwal has been busy trying to stay one up in a power struggle with SoftBank, its major investor. In 2017, Ola amended its Articles of Association to include a clause that prevents SoftBank from buying more shares in Ola without the approval from the company’s founders and board.

Ola, which just celebrated its 8th birthday, is one of biggest success stories in the Indian startup ecosystem. Even as it expands abroad aggressively, the company continues to prove its business efficiency and growth in India, with a renewed focus on its foodtech venture Foodpanda. It is also exploring new interests in epharmacy as well as grocery.

While trying to keep Softbank at bay, Ola may now look to a new investor to pad up its finances. The company has been ensured funding from Flipkart cofounder Sachin Bansal and existing backer Steadview Capital for nearly $200-250 Mn (INR 1407 Cr- INR 1759 Cr) and another share of primary capital from Singapore-based sovereign wealth fund Temasek.

In June, Ola said that it has managed to turn a profit from every ride booked on its app in India. It is now looking to leverage its reach to explore categories where the supply and demand requirements are similar to its business.

As part of its global expansion this year, Ola has launched its services in Australia, UK, and New Zealand, with offices in Dhaka, Bangladesh. In India, however, the company has been in troubled waters with regular strikes from its drivers regarding payments and incentives.

Though the company’s operating loss widened 32% to $543.5 Mn (INR 3,731 Cr) in FY17, the company is aiming to be profitable this year.

The Ola founders’ tussle with investors to retain a majority stake in the company may be a wise move, not just to have a greater say in the company, but also, perhaps, to avoid the fate of Flipkart founders, both of whom were ousted after the Walmart takeover.

[The development was reported by ET.]