Olacabs raising $210M in Series D investment from SoftBank, Tiger Global, others
Mumbai-based ANI Technologies Pvt Ltd, the company behind Olacabs, an online marketplace for cabs and car rental services, has entered into an agreement to raise $210 million (approximately Rs 1,260 crore) in its Series D round of funding from SoftBank Corp., with participation from existing investors Tiger Global and Matrix Partners India, besides Steadview Capital.
The fresh capital will be used to expand Ola's operations into new cities and compete harder against Uber as well as other local peers such as TaxiForSure and Savaari, among others.
The new development comes at the same time as SoftBank's $627 million deal to invest in Snapdeal.com, one of the top three e-commerce companies in India.
Both these investments are being routed through SoftBank Internet and Media, Inc. (SIMI), a new unit created a few weeks ago with Nikesh Arora as its head. Arora, a former top honcho at Google, was roped in by SoftBank chief Masayoshi Son especially to lead investments in internet domain.
Arora is joining Olacabs board as part of the investment.
"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," said Bhavish Aggarwal, co-founder & CEO of Ola.
Morrison & Foerster LLP acted as legal advisor while Raine Group LLC was the financial advisor to SoftBank.
Olacabs was founded in January 2011 by IIT Bombay alumni Bhavish Aggarwal and Ankit Bhati. Prior to setting up Olacabs, Aggarwal was working as assistant researcher at Microsoft Research, India, while Bhati was working as system administrator at Wilcom. The services provided by Olacabs include point-to-point services within the city, hour-based rental services and bookings for outstation travel.
The firm is now present in 19 cities and has partnered with 33,000 cabbies so far.
It recently raised Rs 250 crore ($41.8 million) in its Series C round of funding led by Hong Kong-based equity hedge fund Steadview Capital and Silicon Valley-based Sequoia Capital. Existing investors Matrix Partners India and Tiger Global Management also participated in this round.
In November last year, Olacabs had raised its Series B round of funding led by Matrix Partners India for a big minority stake, with participation from existing investor Tiger Global Management. Although the company had not disclosed the amount at the time, media reports pegged it at $20 million. Prior to that, it had raised Rs 19.2 crore ($3.2 million) from existing investor Tiger Global in July the same year, which was believed to be part of the same round.
Back in 2012, the company had raised over $5 million in its Series A funding from Tiger Global. Prior to that, it had raised angel funding from a bunch of individual investors, including Rehan Yar Khan and Anupam Mittal.
Online cab booking service providers have been one of the darlings of venture capital firms, attracting oodles of funding in the last year or so. In this segment, Ola is mainly competing with Google Ventures-backed Uber, which came into India last October, and domestic players such as TaxiForSure (backed by Accel Partners and Bessemer Venture Partners), Savaari, taxiGUIDE and Cabs24X7.
While on the one hand, they have been slowly giving an organised face to the highly fragmented market for taxis in the country, the rush of cash among the peer group and the race to break out of the pack have now forced the top bracket players to get into a price war. Industry experts say the discounts and cut throat pricing is sinking firms deeper into losses. However, with the money raised from VC firms, the operators are currently looking to garner deeper market presence.
SoftBank has been aggressively looking at the Indian internet market for the past few years. Olacabs is its second biggest bet on India, after its infusions of $627 million into Snapdeal just recently and $200 million into InMobi in 2011. The Japanese telecom major is also operating a joint venture with Sunil Mittal-run Bharti Group. Called Bharti SoftBank (BSB), the JV is running an instant messaging (IM) app service called Hike.
(Edited by Joby Puthuparampil Johnson)