- Sachin Bansal is investing up to US$ 100 million in Ola as part of its latest funding round.
- This investment is a boost for Bhavish Aggarwal who’s looking for new investors to curb the influence of Softbank.
- Both founders have spoken openly against foreign competition w.r.t. their respective startups in the past.
- Also, Sachin faced similar repercussions with Tiger Global when he was forced out of Flipkart.
Flipkart co-founder Sachin Bansal, who received US$ 1 billion with the Walmart deal, has invested Rs 150 crore (US$ 21.18 million) in Ola Cabs. He is expected to invest up to US$ 100 million in Ola in this round. The investment is part of a larger funding round, which will value Ola at US$ 5.7 billion.
As we had DKODED in our analysis earlier, Bhavish Aggarwal, founder and CEO, Ola Cabs, is looking for more investors to counter the influence of Softbank. The investor owns around 26% stake and was planning to invest US$ 1 billion.
The two pioneering entrepreneurs have more in common than meets the eye. Flipkart started losing market share and ramping up losses after the entry of Amazon in India. In 2017-18, Flipkart’s losses had reached Rs 3,200 crore, growing by 70% yoy.
Similarly Ola was stung by the entry of Uber. Its losses increased to Rs 4,897.8 crore in 2016-17 (compared to Rs 3,149.9 crore in 2015-16) despite a growth of 70% yoy in income.
At the Carnegie Global Summit in Bangalore in 2016, both Bhavish and Sachin had strongly supported policies to favour domestic business in their respective sectors.
Sachin Bansal had then said, “We need to do what China did — we need to tell the world we need your capital and not your companies.”
Bhavish had commented in support of the sentiment, “Uber’s prices might be 15% lesser than ours, but our higher market share tells market truths and realities… global companies come in and put in predatory prices, which isn’t fair to the local markets and not even sustainable.”
But as Sachin Bansal was to soon realize, capital can be equally toxic, and it is perilous to let any investor exert too much influence. In his case, it was Tiger Global, which owned around 20.5% stake in Flipkart as of February 2018. The investor was represented by Lee Fixel on the board. Fixel allied with other investors to ensure the removal of both Sachin & Binny Bansal from operational responsibilities at Flipkart . Then they gave Kalyan Krishnamurthy, former executive at Tiger Global the CEO’s position.
When the Walmart talks were on, Sachin thought he could try and increase his stake and get back an operational role in Flipkart. But again, Fixel along with other board members favoured Krishnamurthy and Sachin was unceremoniously edged out.
Interestingly, Bhavish faces an arguably similar situation with Softbank attempting to increase stake and also push for a merger with Uber according to reports. Bansal’s investment is key to Bhavish’s efforts to keep Softbank in check and perhaps a shot at redemption for the former. But does Softbank have an ace up its sleeve? Keep watching this space for more!