#olacabs, India’s largest cab network today announced its Series C funding of INR 250 crores from Hong Kong based equity hedge fund, Steadview Capital and venture capital firm Sequoia Capital. Existing investors Tiger Global Management and Matrix Partners India have participated in this round of funding as well.
Ola will use funds from this investment to expand their operations to newer markets as well as invest a sizable sum into the supply ecosystem to enable micro-entrepreneurship in the driver stakeholder segment.
“We intend to be present in atleast 20 cities by the end of this year. We are also deeply involved with the supply ecosystem by helping drivers become entrepreneurs and creating socio-economic empowerment for them. We are happy to announce that we are earmarking a sum of INR 100 crores towards nurturing this ecosystem in the next one year. Steadview and Sequoia are great partners to have on board with both of them bringing deep understanding of consumer businesses.” [Bhavish, Cofounder of Olacabs]
Ola claims to get 50% bookings from its mobile app and boasts of over 11,000 cabs on their platform present across 9 cities. The company earlier raised Series B funding of $20mn from Tiger Global and Matrix Partners.
Here is a short QnA with Olacabs cofounder, Bhavish.
NextBigWhat: 250Cr funding – what’s the plan?
We are growing fast, 9 cities already and that count is expected to cross 20 by the end of this year. We’re also earmarking INR 100cr towards nurturing entrepreneurship in the driver ecosystem. We are working closely with drivers and operators by up-skilling them and making them partners in growth. This also includes our initiatives with leading car manufacturers and financiers to make buying a car accessible and possible for a driver.
NextBigWhat: Premium offerings: How is it doing?
The premium category has been doing great. We understand that category usage is all about use cases` With that we are present across all the categories now- Mini, Sedan and Luxury.
NextBigWhat: What’s working? What are the challenges in growth from hereon?
Our understanding of the market and our contextual approach to the problem works in our favor. We are creating solutions such that the real problem at hand is addressed. India is a very different market and needs a hyper-local approach to transportation.
Growth from hereon looks exciting. It is a large problem to solve, in every Indian city/town. Availability of high quality inventory and well trained drivers are both a challenge. That is where considerable focus has been in the recent past. This investment will allow us to invest significantly, as much as INR 100cr into the supply side of the ecosystem.
NextBigWhat: What drives valuations in the taxi business?
While a lot of generic factors like growth, market etc play a role, in my view leadership and market potential determine valuations atleast in a market like India. It is not just about a first mover advantage, but also about a holistic approach to the ecosystem that will be considered when pegging a valuation.
NextBigWhat: Importantly, are you moving to marketplace model or sticking to inventory?
We’re enabling micro-entrepreneurship at the driver level and have managed to do that successfully in every city. So in a sense, it is like a marketplace of small to medium sized entrepreneurs whose business we facilitate. We think this will be real value creation in the long run.
Ola competitor TaxiForSure recently raised $10mm and plans to launch in 20 new ciites. Uber too launched Uber X in India.