Ola, India's biggest ride-hailing service, said on Wednesday it had raised $500 million from investors including Baillie Gifford, Falcon Edge Capital, Tiger Global, SoftBank Group, DST Global and Didi Kuaidi. According to a report in the Financial Times, the fund raising values Ola at $5 billion.
Ola, which completes more than 1 million bookings a day, will use the funds to grow its existing services and to invest in new markets and products, the company said.
Ola competes with Uber Technologies in India. The latest round of funding comes just months after San Francisco based Uber's announcement to invest $1 billion in India as the app-based taxi-hailing market in the country heats up.
Over the past few months, Ola has also introduced a bunch of services to take on Uber, including shuttle services, expanding its mobile wallet, introducing WiFi-cars to select users and running a cafe service on its app.
With more than 350,000 vehicles registered on its platform across 102 cities, Ola, whose existing investors include SoftBank, Tiger Global, Steadview Capital, Sequoia and Accel Partners, has now raised a total of $1.3 billion.
According to the press release, Ola has grown by over 30 times in the last one year.
“As we pursue our mission to build mobility for a billion people, we are excited about bringing onboard partners who can help us get there faster. We will continue to build for the local market through innovative solutions like Ola Share, Ola Prime and Ola Money, as we grow the mobile ecosystem in India,” Bhavish Aggarwal, Co-founder & CEO, Ola was quoted as saying in the report.
The fund raising comes at a time when Indian startups are facing a squeeze due to the Chinese slowdown that has hit the market value of Alibaba and investor sentiment. Experts have also raised doubts that the Indian startup ecosystem is entering a bubble phase with exorbitant valuation demanded by the entrepreneurs.
In fact, a downsizing of staff at food technology startups TinyOwl and Zomato have been viewed as the beginning of the end of the bubble.
"These incidents highlight some bitter realities about the Indian startup ecosystem, which have so far been overshadowed by the multi-billion dollar valuations of a handful of companies, and the multi-million dollar funding rounds they have done," Arvind K. Singhal, chairman and managing director of consultancy firm Technopak said in a recent article in Quartz.
Though Ola's latest round of fund raising cannot be taken as a proof to deny the much-debated fund squeeze, one thing is sure: the company is preparing for a bigger battle with Uber.
An indication to this effect is seen in Didi Kuaidi's interest in Ola. Didi Kuaidi is a Chinese ride sharing company, which this Forbes article says is a mortal enemy of Uber.
In its bid to take on Uber, Didi Kuaidi had forged an alliance with Lyft of the US. The alliance with US enemy of Uber was aimed at building "a collaborative global ridesharing alliance".
With Didi Kuaidi's investment in Ola, a grand alliance against the dominance of Uber may finally be taking concrete shape. But then, indeed, the alliance is fighting against a company valued at $50 billion.
With inputs from Reuters
Editor's note: The last sentence of the article has been corrected to clarify that Didi Kuaidi has invested in Ola and not Uber
Updated Date: Nov 19, 2015 08:41 AM