Ola, the top cab service provider of India, has reached a valuation of $4.3 billion after receiving funds worth $50 million from two Chinese investors. These two investments are from Sailing Capital and China-Eurasian Economic Cooperation Fund (CEECF).
This latest investment has highly raised Ola’s valuation which is why both Sailing Capital and CEECF is said to hold combined share of more than 1% in the company. However, Ola has not made any comments on the same.
Ola has received this latest investment at a fortunate time since the company is expanding aggressively in India and outside of India. They are also working on a food-tech platform to compete with the big players such as Swiggy and Zomato. The Bangalore based cab service company Ola, is also continuously striving to compete with its all time competitor Uber Technologies.
Ola raised $1.1 billion in fresh funds last October which is said to be the largest fund ever raised by Ola. These funds were raised from China’s Tencent Holdings Ltd. and the existing investor, Japan’s SoftBank Group Corp. and had raised Ola’s valuation to $3.5- $4 billion. In recent talks Ola revealed that they are looking to raise yet another $1 billion from new investors to raise a total of $2.1 billion.
As told by one of the Ola’s spokesperson, Ola will reach a valuation of $7 billion once the $2.1 billion investment is confirmed. This shows that the current valuation of $4.3 billion is still lower than what Ola has projected to reach in the near future.
Seeing Ola’s massive future plans of expanding both in and outside of India, they are going to need plenty of funds to expand properly. That is probably the reason why Ola is rapidly flooding their business with investments in billions.
Not only cab services but also food delivery services is on Ola’s target of expansion. Ola had its own food delivery services which was shut down within one year of serving but now they are looking into the same market again. Last year, Ola acquired Foodpanda’s operations in India to beat the rising competition from UberEats, Zomato and Swiggy.
Ola had invested $200 million in the newly acquired business, Foodpanda before acquiring Indian transportation and ticketing app Ridlr just few months after they acquired Foodpanda.
Prevalent Challenges Ola would have to Face Before it Goes on a Ride to Becoming the Leader of on-demand Ride Hailing Brand
Ola will need to have regular flow of funds to beat the big competitions it is playing with such as Uber which also has SoftBank Group as an investor. This year Ola has begun the international expansion in United Kingdom and Australia (its first international country). Recently they announced the soon-to-begin services in New Zealand.
Ola’s biggest competition, Uber has also taken some serious actions in order to stand at the top. Uber has reportedly said to double its investments in India and is not holding back to get into a fierce fight. “India is absolutely a key market. We are doubling down on our investments in the country like never before. We are making critical investments. India is vital to our goal as a global tech company” said Uber COO, Barney Harford.
[Also see: LimeBike Scooter Gets $335M Funding from Uber and Google]
However Uber does not only have to worry about Ola because it has other competitions like Didi Chuxing, a Chinese transportation service providing company. Didi and Uber has common investor SoftBank which also is an investor for Ola in India.
Didi has won the Chinese market and is now set to battle with the US based cab service company Uber. Uber has been in a lot of controversies and is trying to clear its image. This has given Didi the edge in the race. Didi surpassed Uber last year with a valuation of $56 billion whereas Uber having a $48 billion valuation.
[To know more, read: Uber Makes a Deal with Didi Chuxing in China at $35 Billion ]
Acknowledging the Uber-Didi competition, Bob Zhang, CTO of Didi said, “Everyone knows our main competitor is very actively internationalising, if we don’t advance quickly, the window of opportunity could close.”