It looks like yet more fuel is about to get poured on the already-hot transportation app market in Asia. India’s Ola is raising $500 million+, at a valuation that we’ve heard is around the $5 billion mark, with $225 million committed so far.
The news comes as the company — which competes in its home market against the likes of Uber and Indian startup Meru — continues to expand into more cities, and more products. Today, Ola launched a new car leasing service for drivers on its network; last week it expanded to shuttle services for commuters.
The raise is due to be finalised in the next week or two and announced officially then, sources tell TechCrunch. As it is still in progress, the final amount and final valuation may also change.
This funding, a Series F, has been rumored for some time now, with the first reports surfacing just after Ola announced its last raise of $400 million in April of this year. That round, a Series E, valued the company at $2.5 billion.
Financial news site DealStreetAsia reported earlier today that Ola had filed documents with India’s Registrar of Companies. These confirmed Ola had already secured $225 million of this latest round. The documents reveal Falcon Edge Capital as the lead investor, with Tiger Global Management, Softbank Corp., Hong Kong’s Steadview Capital, Pittsburgh’s ABG Capital and the FII LTR Focus Fund — all previous investors — also involved in this round. New investors include JS Capital (M) Ltd, Parkwood Bespin, and Daniel E. Neary.
We’ve been able to confirm that list of investors with a separate source close to the story.
Ola’s growth comes in the midst of a very competitive market for transportation startups in Asia and globally. Uber, the upstart from San Francisco valued at more than $50 billion, has been putting a lot of effort into growing its presence in Asia. It’s put a particular focus on India and China, recently raising $1.2 billion for Uber China at the same time that its rival in the country, Didi Kuaidi, raised $3 billion.
In India, Uber has committed to investing $1 billion by the first quarter of 2016 to grow its business in the country. Although Uber has run afoul of the authorities at times, now it is trying to work with them more closely as a way of building its business with less drama and more buy-in from the powers that be. Just last week it announced a partnership with the government of Tamil Nadu to expand its business.
Ola, however, remains the bigger company. It is live in over 100 cities to Uber’s 20+, and 250,000 cars in the market today to Uber’s 165,000.
Ola’s bigger vision is to seize the opportunity of a rapidly growing middle class in India coupled with relatively poor existing transportation infrastructure, providing a better service by tapping into rise of smartphones, smart mapping and other technology. The leasing service it announced today — which will initially cover 1,000 vehicles but will be expanded in partnership with Indian car makers in future — addresses the other side of the equation: providing newer “hardware” (in this case, cars) to people to loop them into the Ola transportation network.
But although the transportation of people remains Ola’s first priority, it’s not the only one: Ola has also dabbled in other areas like food delivery. And as the company looks to improve its margins longer term, it may be newer services like these that also see some of the proceeds from this latest investment. DealStreetAsia notes that Ola and investors forecast the company to post a pre-tax profit by 2017-2018.