Why Ola can’t pull a Didi, buy Uber India, and be done with it

Right now, there are no offers Uber can’t refuse. Photo credit: Steve Troughton.

Ride-hailing service Ola is all set to get fresh funds worth US$250-300 million from investor SoftBank, according to local media reports.

Ola is looking to raise about US$500 million in all in the round to focus on “quality of the business, scale,” a source told The Economic Times.

Ola did not respond to an email seeking details. Now, any discussion about Ola is not without reference to its biggest rival, Uber. The companies have been at each other’s throats for years now, with things getting particularly ugly in the past few months.

See: Dear Ola (and Uber): users want efficiency, not nationalist hyperbole

Ola currently claims reach across 102 cities, allowing users to book from over 450,000 vehicles on board. As of June, Uber was aiming to get to 50 cities by the end of 2016.

Big brother

An Ola-branded taxi in India. Photo credit: Ola.

Ola has raised around US$1.2 billion till date. Uber has promised an investment of US$1 billion for India. Ola, valued at around US$5 billion (Uber’s total worth is about US$68 billion), saw revenues of about US$57 million in the year ending March 2015 (latest count available).

Ola has also lost US$119 million, a 20-fold increase over the previous year.

Uber is catching up, but Ola is still the leader by far. Industry experts particularly like its affordable car segment, called Ola Micro, which many say has helped the company further its lead.

For all of Uber’s global strength and expertise, the San Francisco-based company too has been haemorrhaging money, to the tune of $1.27 billion in the first quarter of this year (India stats not available). While Uber has to deal with operations in multiple markets and the ramifications of being a global player, Ola can focus on India and India alone. Being a local player gives it (at least on paper) an unparalleled insight into the quirks and needs of an Indian customer base, and a bevy of powerful investors – Ola counts SoftBank, Yuri Milner’s DST Global, Tiger Global, Matrix Partners, and Indian business magnate Ratan Tata among investors – can give it all the support it needs to take down its rival.

Image credit: Wikimedia.

India vs China