After a funds-parched 2016, India’s new-age tech companies seem to have hit the gas again this year.
Today (Oct. 11), Bengaluru-based ride-hailing company Ola announced that it had raised $1.1 billion (Rs7,180 crore) in a funding round led by Chinese internet giant Tencent. Existing shareholder Softbank and a few other US-based investors also participated in this round.
The company confirmed what Quartz had reported on Oct. 10 based on a Sept. 20 filing with the registrar of companies.
“Ola is also in advanced talks with other investors to close an additional $1 billion as part of the current financing round, concluding a total raise of over $2 billion,” a company release said.
The massive funding comes just months after home-grown e-commerce major Flipkart raised $1.4 billion, the single largest funding round by any Indian internet firm. Flipkart is now the world’s third-most funded private company.
Ola is set to use the funds to improve the supply of cabs and technology. It will also “make significant technology investments into artificial intelligence and machine learning capabilities to solve for India’s unique mobility problems.”
“Ola has certainly led the way in terms of service innovation and adding new services for the Indian consumer,” Kartik Hosanagar, a professor of technology and digital business at University of Pennsylvania’s Wharton School, told Quartz. “However, it lags in terms of its product experience. The funding will allow it to invest in a better user experience with its app.”
Founded in 2010 by IIT-Bombay graduates Bhavish Aggarwal and Ankit Bhati, Ola fiercely competes with US-based Uber, which entered India in 2013. The Bengaluru-based company operates in 110 Indian cities as compared to Uber’s 29.
The timing of this funding round could go a long way in helping Ola against Uber which is battling a leadership crisis globally. Among other things, Uber is dealing with sexual harassment allegations by a former employee. It is also in the midst of scandals in Indonesia, Malaysia, and India involving allegations of bribery, invasion of privacy, and tax evasion. Overall, Uber’s corporate governance has come into question, even leading to the ouster of co-founder and CEO Travis Kalanick.
Meanwhile, Ola has been cruising along.