Ola facing slowdown in funding, the valuation may dip: Report

The once celebrated unicorns like Flipkart and Ola are now facing the brunt of slowdown in funding. This doesn’t come as a surprise as all through the year there have been reports around how startups will feel the pinch of the slowing funding. An Economic Times report reveals that Ola is facing a ‘down round’ as the valuation at which the company is raising money is said to be lower than previous. Ola is now being valued at somewhere between $3-4 billion in its latest round that is led by Japan’s SoftBank, the report claims citing people familiar with the matter. Though its the leader with 60 percent market share in the online ride space, last year it had raised $500 million around the same time for a valuation of $5 billion. SoftBank had earlier invested in Ola, but has been tight lipped calling reports around down round a speculation. “Ola continues to negotiate with investors as it pursues a goal of raising over $600 million this time, but it’s had to peg its expectations lower,” another Livemint report adds. “Investors tracking the space said that Ola’s down round is an example of how the price of capital has changed from the exuberance of 2014 and 2015, and is not a reflection on the company’s performance per se,” the report adds. However, this has been a global phenomenon as companies, even including Facebook, have seen a dip in valuation compared to earlier. With a down round, existing shareholders will see a dilution of their stakes and employee stock value also comes down. Talking about the other popular unicorn Flipkart, also known to be one of the most valued startups in India, and also others have witnessed slash in value holdings by up to 40 percent, according to the report. Flipkart has also seen a drop in valuation from $15.2 billion to as low as $9 billion, which is being blamed on the way the company had handled the growing competition from Amazon. However, these haven’t raised fresh findings at the lower valuations. Meanwhile, the are reports around SoftBank announcing $513 million investment loss on its assets in India.