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Business News/ Companies / Start-ups/  OYO raises $250 million from SoftBank Vision Fund, others

OYO raises $250 million from SoftBank Vision Fund, others

OYO will use the funds from SoftBank Vision Fund and others to scale up network and invest in its Townhouse brand of hotels

OYO’s valuation is likely to surge beyond the $460 million it was worth when SoftBank invested $62 million in 2016.Premium
OYO’s valuation is likely to surge beyond the $460 million it was worth when SoftBank invested $62 million in 2016.

New Delhi: Hotel aggregator OYO (Oravel Stays Pvt. Ltd) has raised $250 million in a funding round led by SoftBank Vision Fund, in a much needed equity infusion that spells the Japanese investor’s continued interest in the space and a renewed confidence in the company it entered in 2015.

The series D investment gives OYO growth capital to scale up its network and invest in its recently launched effort to create premium, self-managed hotels under the Townhouse brand. It also gives OYO the muscle to fend off competition from large online travel agencies MakeMyTrip and Goibibo, which joined forces in October last year.

A part of the capital is also likely to be invested in expansion in South-East Asia. OYO entered Malaysia and Nepal in January and April this year, respectively.

Sunil Munjal-led Hero Enterprise joined the fund-raising as a new investor, with follow-on investors Sequoia India, Lightspeed Venture Partners and Greenoaks Capital.

“As a business family, we have always set new paradigms; so, OYO’s unique business model excites us," Munjal said.

While OYO did not disclose its latest valuation, it is believed to be significantly higher than $460 million from the company’s last funding round in August 2016.

“OYO has solidified its position in India as the leading accommodation brand for consumer affordability and high quality standards. We’re excited to continue to support OYO as they further expand their position in India and bring the OYO promise of affordability and elevated hospitality to other markets," said Justin Wilson, SoftBank’s nominee on OYO’s board of directors.

OYO started in 2013 as a hotel aggregator and has tried varied business models over the years. OYO Townhouse is similar to the franchise model employed by chains like Treebo and Fab Hotels. It is a set of premium properties taken on long-term lease and managed entirely by OYO.

While it has high upfront costs, Townhouse offers better stay experience and more monetization opportunities.

“We are now focusing on further accelerating network coverage to consolidate our leadership in economy through OYO Rooms and mid-market category through Townhouse brands. We will also deploy fresh capital to take our made-in-India business model to international markets which are characterized by a similar supply-demand imbalance in real-estate and hospitality," said OYO chief executive officer Ritesh Agarwal.

The investment also signals SoftBank’s continued support to OYO. The Japanese firm has seen massive write-offs in its investments in and Snapdeal.

The deal makes OYO a key company in SoftBank’s portfolio—which includes the likes of Paytm, Flipkart, Hike, Grofers and InMobi—and the second Indian company to receive an investment from SoftBank’s $100 billion Vision Fund.

The Vision Fund has swiftly made large bets in market-leading start-ups across the world. It has made investments in WeWork and Boston Dynamics, and is reportedly eyeing a major investment in San Francisco-based ride-hailing company Uber Inc.

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Published: 07 Sep 2017, 05:22 PM IST
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