A chunk of the $1 billion that Flipkart co-founder Sachin Bansal pocketed while exiting the e-commerce firm last year seems to be flowing back to India’s startup ecosystem.
And Ola, India’s largest cab aggregator, is his first big investment.
Bansal has invested an additional $71 million (around Rs500 crore) in the Bengaluru-based company, according to a declaration filed with the registrar of companies on Feb. 19. This is a top-up over the $21 million he pumped in last month.
His personal investment is part of Ola’s larger series J funding round that is likely to exceed $1 billion as the company had indicated after it raised $1.1 billion in January 2018 from Chinese internet giant Tencent Holdings and existing investor SoftBank. Existing investor Steadview Capital had also invested $75 million in the series J round last month.
“I have known (Ola founder) Bhavish (Aggarwal) as an entrepreneur and as a friend over these years and I have great respect for what he and the team at Ola have built in just eight years! I am personally thrilled to be part of the Ola journey and I look forward to contributing to their success,” Bansal said in a statement.
Bansal and Ola’s co-founders have worked together in the past. In 2016, Bansal and Aggarwal joined hands to lobby with the government against their global rivals, Amazon and Uber, voicing concerns of a non-level playing field. They also set up an industry body, IndiaTech.org in September 2017, to represent local internet companies.
The successive rounds of funding raised by Ola will help it build a war chest big enough to battle rival Uber. The Bengaluru-based company is already deploying funds for its international expansion into Australia, New Zealand, and the UK, the company said.
“His (Bansal’s) investment is a huge encouragement for all of us at Ola and our mission to serve a billion people,” Aggarwal said in a statement. “I personally look forward to learning from Sachin’s journey, his mentorship, and guidance, as we look to build one of the most impactful global businesses out of India.”
While Bansal has been an active investor in local startups since 2014, those investments were modest at around $1-2 million each and typically early-stage. His past investments included startups such as SigTuple, Unacademy, Tracxn, and InShorts, among others.
Besides just helping Ola, Bansal’s investment will provide a much-needed boost to domestic investments in startups, analysts said.
“It is also significant because it will boost domestic capital in India’s largest internet companies. While there is local money being poured in the angel and seed stages, investment in the later-stage startups get skewed towards (venture capital) firms like Sequoia and Accel that raise capital from overseas investors,” said Ankur Bisen, senior vice-president at Technopak Advisors.
More importantly, Bansal will bring to the table years of relevant experience in building and scaling a startup to the next level of growth, according to independent startup advisor Harish HV. “The Indian startup ecosystem still does not have a lot of top entrepreneurs who have turned full-time investors,” he said.
Bansal’s entry as a small but significant shareholder in Ola also presents a credible ally to Aggarwal in his battle for control against SoftBank, the largest shareholder in the company.
SoftBank is also an investor in Ola’s rival Uber. Ola, after modifying some of its regulatory terms to curtail the influence of investors like the Japanese firm, has been trying to bring in fresh investors.
Ola, according to industry sources, wants to avert an encore of the situation that faced Snapdeal in 2017. Egged on by SoftBank, a common investor, the e-commerce firm was on the verge of being sold to Flipkart at the time. The deal, however, fell through after Snapdeal’s founders retracted.
SoftBank, which had invested $250 million in Ola in 2016, had also offered to invest $1 billion more. According to industry analysts, this additional funding would have given SoftBank a controlling stake in Ola.