Update: Ola today has confirmed that it is raising $210 Mn (approx. INR 1260 cr.) from SoftBank Internet and Media, Inc. (SMIC) and existing investors, Tiger Global, Matrix Partners India and Steadview Capital.
Masayoshi Son, Chairman and CEO of SoftBank Corp. (“SoftBank”) said,
Since SoftBank’s foundation, our mission has been to contribute to people’s lives through the Information Revolution. We believe India is at a turning point in its development and have confidence that India will grow strongly over the next decade. As part of this belief, we intend to deploy significant capital in India over the next few years to support development of the market.
Bhavish Aggarwal, Co-founder & CEO, Ola said
We are thrilled with the pace at which we are growing. Ola is at the forefront of the mobile internet revolution in India and Softbank as an investor and a strategic partner with its global network, brings in a lot of relevant experience and knowledge of this domain. We will continue to build towards our vision of transportation as a seamless and ubiquitous service in every corner of the country and focus on the driver ecosystem to enable micro entrepreneurship and skill development at scale.
Taxi service provider, Ola Cabs, has raised a whooping $210 Mn in a new funding round led by Japan’s SoftBank Corp at valuation of $1 Bn, reports ET. This is the fourth round of funding which Ola has raised and this round comes in just a few months after it received INR 250 Cr. in funding from Steadview Capital, Sequoia Capital and other exiting investors.
Founded in 2011 by IIT Bombay graduates Bhavish Aggarwal and Ankit Bhat, Ola had raised $20M in Series B and $5M in it’s Series A round in 2013 and 2012 respectively.
As per the company, currently it has over 30,000 cars available across 19 cities. Recently it has expanded operations in to Ludhiana, Amritsar, Vizag and Surat.
In 2014, apart from Ola, TaxiForSure had also raised two funding rounds which include a $30 Mn round in Series C and $10 Mn series B.
The Cab Wars
In India, the taxi rental market is estimated to be a $7 Bn market, with a number of players operating in this space, including Savaari, CarzOnRent’s EasyCabs, Meru Cabs, TaxiForSure among others. This not only shows the level of competition but also the market opportunity for these players to tap in to. Investors pouring in money in this space further reinforces the fact that these have a long way to go.
The entry of on-demand taxi booking service, Uber, in India to a certain extent had posed a threat to these players due to the ease in booking, instant service and easy payment options. However, Uber has been in trouble after RBI had declared it mandatory for companies to follow a two-step authentication process for credit card transactions and the payment process used by Uber violates this process. It had been given an ultimatum to comply with these rules till October end. Uber is yet to announce the alternative to this payment process.
But looking at the innovative and hassle free process used by Uber, which has generated a lot of buzz in the Indian market, recently Meru had introduced a Wallet for cash free travel along with Ola’s Wallet to enable cash-free cab bookings. The domestic players are trying hard to copy the same user experience, though quite unsuccessfully so far.
Ola has been trying to tackle the Indian market quite innovatively as well. Recently it made Mumbai’s traditional Kaali-Peeli (Black N White) taxis available for booking via its mobile app, with over 2000 Kaali Peelis across South Mumbai already registered on the Ola platform.
Meru cabs has been unable to bring down it’s prices and still costs more than the top line offerings of Uber and Ola. Ola earlier this year had also launched its low-price offering i.e. OlaMini, which competes with UberX, which was also introduced in the country recently by Uber.
Ola on the hand has been able to offer very competitive prices but hasn’t been able to provide a great customer experience so far. Personal experience aside, one can find tons of complaints across the social networks about their bad experience with Ola. However this can be the outcome of the rapid scaling up and increase in number of cars.
Ola’s other investors include Sequoia Capital, Steadview Capital and Tiger Global.