Markets

Cab rider Ola raises $1.1 bn from venture funds

Cab rider Ola raises $1.1 bn from venture funds

Leading cab aggregator Ola on Wednesday said it raised $1.1 billion (Rs 7,150 crore) in latest funding round from venture firms led by Tencent Holdings Ltd, a leading Chinese internet firm.

With its latest round of funding, Ola will be making strategic investments in supply, technology, and innovations to build for the unique transportation needs.

The company is in advanced talks with US -based financial investors for the second tranche, which would also include funds from existing investors, a source close to the company said, declining to be identified as the talks were not yet finalised. Prior to this, the company had raised about $1.9 billion since it began operations in 2011.

The new investment comes as Ola's top competitor, Uber, continues to face challenges around the world. The transportation and mobility industries are seeing huge changes globally.

It also plans to invest in artificial intelligence and in-car entertainment facilities which, according to Reuters, will allow riders the choice of steaming music and videos. In November 2016, SoftBank had invested Dollars 250 million in Ola.

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So far, these investors have put their full weight behind the consumer internet "unicorns" that they perceive to be the outright winners in their respective categories, even as these local Internet giants attempt to stave off existential threats from multinational rivals such as Amazon India and Uber Technologies.

While ANI Technologies is not a publicly-traded company, according to regulatory documents, its revenues registered a stellar growth at Rs 758.23 crore during 2015-16 compared to Rs 103.77 crore in the previous fiscal. The strategic partnership with Ola makes it possible for Tencent to be part of the fast-growing ride-hailing space in the country.

However, Ola suffered a consolidated loss of over Rs 2,311 crore - about Rs 6 crore a day - during that fiscal on account of heavy advertising, promotional expenses and other costs. Flipkart leads the charts, having raised at least $2.8 billion in two separate tranches from SoftBank, Tencent, eBay and Microsoft, while Paytm raised $1.4 billion from SoftBank earlier this year.

Ola will also benefit from Tencent's expertise in the country's mobility market. It now operates in 100 Indian cities and said it planned to use the funds for further expansion.