App-based taxi aggregator Ola today said it has raised $400 million (about Rs2,500 crore) from a clutch of investors led by DST Global as it eyes expansion into smaller cities across India.
After this round of funding, the taxi app, with a value of around Rs15,600 crore, has become the third-most valuable venture-backed company in India.
According to a report in The Economic Times, only Flipkart and Snapdeal are valued above Ola, but the company is competing against Uber, one of the most exciting startups in the world. Although it is much smaller than Ola in India, Uber it is the second-most valuable startup in the world at $41 billion.
After this round, the firm has raised close to $800 million. In October, it had raised $210 million from a group of investors led by Japan's SoftBank.
The firm intends to utilise the funds to expand to 200 cities from 100 by year-end as well as ramp up its technology base. There are also plans to invest on increasing its base of cab drivers and retaining them with various schemes.
In a statement, Ola said it has raised "$400 million in Series E round of funding led by DST Global with participation from GIC, Falcon Edge Capital and existing investors SoftBank Group, Tiger Global, Steadview Capital and Accel Partners US."
Ola has expanded to 100 cities in the current year from 10 cities a year ago and this growth has been further accelerated with the acquisition of TaxiForSure in March 2015, it added.
"The additional investment will allow Ola to go deeper into smaller cities to build personal transportation ground-up. Ola has already seen tremendous growth in tier 2 & 3 cities owing to very limited transportation options that currently exist," the firm said.
There is a large opportunity waiting to be unlocked to transform the ecosystem from within, it added.
Besides, the company said it will help drivers from these small towns turn entrepreneurs, creating lasting social and economic impact for them, while a robust transportation utility is created for the citizens.
"The company will continue to invest in building cutting edge technology to suit the needs of drivers and customers as well as invest in the driver ecosystem. Ola aims to further localise its offerings for the benefit of citizens and driver partners in every market," it added.
Ola plans to be in 200 cities by the end of this year and will spend $100 million on building TaxiForSure as well as on expansion into tier II and III cities.
The firm said that driver partners on the Ola platform have grown as entrepreneurs, benefiting from access to increased scale and revenue.
They also benefit from better-structured financing options offered by banks and financial institutions as well as significant discounts from car manufacturers, if associated with Ola, it said.
Through 'Ola Pragati' in partnership with the State Bank of India, drivers can now avail of a daily loan repayment facility and a lower down payment to buy a car of their choice.
Ola aims to offer this programme to over 100,000 driver entrepreneurs across India within the next 2 years.
It is also experimenting with instant food delivery with OlaCaf?, currently available in beta across four cities.
Ola Co-founder and CEO Bhavish Aggarwal said: "DST Global, GIC and Falcon Edge have been partners in some of the leading internet success stories globally and we are excited about having them on-board.
Its other investors include Tiger Global, Matrix Partners India, Steadview Capital and Sequoia Capital.