Indian ride-hailing service Ola’s founder Bhavish Aggarwal turned down a billion dollar business fund raise by SoftBank Group Corp. The Japanese conglomerate, led by Masayoshi Son, was an early backer of Ola, but Aggarwal has grown concerned about its influence as SoftBank took a stake in his archrival, Uber Technologies Inc., and then encouraged the rivals to merge.
As a part to maintain the independence of his firm,Aggarwal refused to accept the deal and decided march towards Series K,a letter almost unheard by the researchers that track such things.
“Bhavish is spurning SoftBank money as he doesn’t want to get diluted out of Ola,” said Mohandas Pai, venture capitalist and former chief financial officer of Infosys Ltd. “Founders become employees when someone sits on your board and tells you how to run the show.”
The 33-year-old Mr Aggarwal founded Ola, a brand of ANI Technologies Pvt, in 2011 along with Ankit Bhati, his classmate from engineering school. It currently has 1.3 million drivers on its platform in over a hundred cities and since last year has expanded to Australia, New Zealand the U.K. It also entered the food delivery business in India, burning cash in a bid to grab market share from Uber Eats as well as local food delivery operators, Swiggy and Zomato.
Ola did raise more money from Tencent Holdings Ltd., the Chinese internet giant. In its home country, the India company began raising tiny rounds, collecting as little as $50 million from investors. “In the Indian e-commerce universe, there are very few investors who will write big checks of half-a-billion dollars or more,” said Gautam Chhaochharia, managing director and head of India research at UBS.
SoftBank has a lot more at stake with Uber and needs it to succeed to demonstrate the potential of its massive Vision Fund. The San Francisco-based ride-hailing giant is said to be preparing for an initial public offering at a valuation of as much as $120 billion.
Merger talks with Ola are off now as Uber prepares for the IPO. The U.S. company sold its operations in Southeast Asia to Grab last year, a move that trimmed its losses but also cut off growth potential in an important region. India is sure to be highlighted as a key example of overseas opportunity when Uber files its IPO paperwork.
Meanwhile, Aggarwal appears to be girding for a future onslaught. He’s collecting cash and hoarding what he can. Ola has become more prudent with its spending, cutting incentives for drivers and trimming subsidies for both ride-hailing and food-delivery businesses. If he expects Uber — and SoftBank — to come after him again, he’ll need all the money he can to protect his business.