Is Ola’s $60 Mn International Expansion In Trouble?

Ride hailing company Ola has had a lot on its plate in recent times — fighting off Japanese conglomerate SoftBank to retain control in the company; reducing the attrition rate; reduced growth in daily rides; pivoting food delivery plans via Foodpanda; drivers backlash; chopping and changing of its electric mobility plans. And now the company’s international push maybe in jeopardy.

In February 2018 when Ola went international with the launch of operations in Australia, the team was boasting of being Indian-startup-gone-abroad. The team went on to expand international ops— UK and New Zealand.

After more than a year of fighting to find a foothold in international waters, the company turned its business focus in India, with electric vehicles, two wheelers, and self-driving alongside its mainstream ride-hailing business.

Today, a Business Standard report has said that Ola may put a halt on its international expansion plans and is also slowing down its investments in overseas markets. It was initially reported that Ola is planning to expand to Netherlands, Kenya, Dubai, Israel and Brazil, but these plans have reportedly been shelved. However the company has dismissed the report and said that it is doing well in all its three overseas markets.

An Ola spokesperson said that the company has been growing well internationally and has only spoken about expanding further in Australia, New Zealand and the UK. The spokesperson added that the company is on track to achieve this goal.

Ola’s international expansion plans have been called into question as the company tries to close a $2 Bn funding round. It must be noted that SoftBank can easily invest this amount in the company, and reportedly was willing to, but Ola cofounder and CEO Bhavish Aggarwal is ready to raise smaller round from multiple investors to not let SoftBank increase its stake and seize control of the company.

Aggarwal’s fears can be traced back to SoftBank’s attempts to find mergers between its portfolio company, which also includes Ola rival Uber. SoftBank saw a failed merger of Snapdeal and Flipkart (Snapdeal is still trying to recover from the fall) and second, Walmart acquired Flipkart giving SoftBank major returns on its investment, and Flipkart founders left the company.

Further, the cost attached to international expansion is not small. The company has already invested $60 Mn into its international operations over the last 15 months. Further, it was speculated that international business is expected to account for more than one third of Ola’s consolidated revenue by the end of this financial year.