Mumbai: Ratan Tata, chairman emeritus of Tata Sons Ltd, has made an undisclosed investment in online taxi-hailing service Ola, his seventh investment in a domestic start-up in the past 11 months.
Tata had earlier invested in online marketplace Snapdeal, furniture store Urban Ladder, recharge and mobile commerce platform Paytm, online auto classifieds portal CarDekho, jewellery store Bluestone, and Kaaryah, an online fashion store for women.
“Tata’s inclination towards transportation as a segment, given the way he steered Tata Motors, is well known. Also, Tata himself has built businesses that have focused on immense social impact and value creation,” said Bhavish Agarwal, co-founder and chief executive of Ola, confirming the investment, announced by the company on Wednesday.
Ola has emerged as one of the most valuable start-ups in the country, mopping up $800 million over the last 12 months, with more than $730 million being pumped in since October last year. The company, which claims to have about 200,000 drivers in more than 100 cities, is backed by Japan’s SoftBank Group and Russian investment firm DST Global, apart from Accel Partners and Tiger Global Management, among others.
In April, the company was valued at $2.5 billion.
Ola has made some aggressive moves to capture a bigger share of the online taxi-hailing space, acquiring cross-town rival TaxiForSure for $200 million in a cash-and-stock deal in March this year, thus making it even more difficult for San Francisco-based Uber to gain ground in India.
Ola has also entered the hyperlocal delivery space with the launch of its food delivery service Ola Café in March. Last month, it launched a pilot project to deliver groceries, called Ola Stores.
Tata, on his part, has been a prolific investor in the domestic consumer Internet space, which has seen the emergence of billion-dollar companies such as Flipkart, Snapdeal, Ola and Paytm. Two companies in Tata’s portfolio, Snapdeal and Paytm, have mopped up funds to the tune of $1.1 billion and $575 million, respectively, from venture capital firms. Further stepping up his involvement in the sector, Tata also joined venture capital firm Kalaari Capital in an advisory role in February.
Though Ola did not comment on the quantum of investment by Tata, industry observers said such investments usually range between Rs.25 lakh and Rs.5 crore.
An investment from Tata is more valuable for a budding venture as it helps build the brand, than an already established company like Ola.
“An investment from Ratan Tata holds more value for smaller companies because such endorsements help them in brand building, more than big companies like Ola. The companies should be very early stage or disruptive in nature. Only then will such investments help the ecosystem to evolve,” said Harminder Sahni, founder of consultancy firm Wazir Advisors.
Tata is among several corporate veterans such as Infosys Ltd’s former chief executive Kris Gopalakrishnan, former Infosys director V. Balakrishnan and Manipal Education Group chairman T.V. Mohandas Pai, who are now seeking a slice of the start-up ecosystem through personal investments. According to industry estimates, total investments in domestic technology start-ups in 2014 added up to about $5.2 billion across more than 300 deals.
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