Ola founder Bhavish Aggarwal fights to avoid Flipkart’s fate
In dealing with investors, Ola’s Bhavish Aggarwal has been ahead of the curve compared with other top entrepreneurs
Bengaluru: It is well-known that Ola co-founder and chief executive Bhavish Aggarwal used to obsessively track the strategy and tactics deployed by Travis Kalanick, the co-founder of Uber. What isn’t that well-known is that the goings-on at Ola’s neighbour, Flipkart, and Snapdeal have left more of a mark on Aggarwal.
Flipkart and Ola count SoftBank Group Corp. and Tiger Global Management as their two largest shareholders.
After several missteps by co-founders Bansals, investors led by Tiger Global pushed them out of the day-to-day running of Flipkart last year. Tiger Global, the New York-based investment firm, installed its man Kalyan Krishnamurthy as Flipkart’s CEO in January 2017. Barely a year later, Flipkart is on the verge of selling itself to Walmart Inc. for $20-21 billion in a deal that is being driven by Tiger Global partner Lee Fixel. While the sale is the biggest money-spinner ever in India’s start-up ecosystem, it is still a let-down for Flipkart’s ambitious founders who once wanted to become world-beaters.
Early last year, at another unicorn Snapdeal, its largest shareholder SoftBank was trying to force a sale of the company to Flipkart against the wishes of its founders, Kunal Bahl and Rohit Bansal, who had lost out to Flipkart and Amazon in the e-commerce war. The sale finally fell through after another key investor Nexus Venture Partners sided with the Snapdeal founders.
Now, Ola’s Aggarwal is trying to pre-empt the fate of the Bansals and the Snapdeal founders, who are also angel investors in Ola.
Mint reported on Thursday that Aggarwal is in the midst of a boardroom battle with SoftBank after he effectively pushed out Fixel from the board of Ola last year.
In dealing with investors, Aggarwal has been ahead of the curve compared with other top entrepreneurs. He strengthened his legal rights and restricted those of SoftBank last year. Even before that, he ensured that with every new funding round, he brought new investors to Ola thereby curbing the influence and power of any single investor. That’s unlike Flipkart and Snapdeal, which were over-dependent on Tiger Global and SoftBank, respectively.
Last year, Ola closed a $1.1 billion funding round from SoftBank Group, Tencent Holdings and a bunch of other investors. Two people familiar with the matter said that SoftBank had offered to invest much more in Ola but Aggarwal resisted its offer and instead worked to bring new investors. Although the process took nearly a year, it meant that Aggarwal is still calling the shots.
These two factors may turn out to be decisive in Aggarwal’s efforts to maintain control of his company, especially if SoftBank doesn’t give up its pursuit of a merger between Ola and Uber India.
“You can look at it and say that it’s foolish of Bhavish to pick a fight with SoftBank and Tiger. They are really powerful and you would ideally want to be in their good books. But Bhavish is as strong-willed and confident as anyone else. Whether it’s a smart move or not, he’s doing it because he’s very clear that it’s his company. For Bhavish, losing control of Ola is unthinkable. After having seen what’s happened at Flipkart and Snapdeal, he’s even more paranoid about what his investors could do,” one of the two people cited above said.
Ola was started by Aggarwal and Ankit Bhati (chief technology officer) in 2011. It has raised roughly $2.5 billion from SoftBank, Tiger Global, Matrix Partners, Tencent, DST Global and others. At its current valuation of $4 billion, Ola is India’s third-most valuable start-up after Flipkart and Paytm.