Masayoshi Son, the head of SoftBank Group Corp., has been one of the biggest investors in Indian startups off late, if not the biggest. Son has been a champion investor when it comes to local ride-hailing companies in Asia. He first invested in Grab in Southeast Asia region and then Didi Chuxing in China before backing the Indian startup Ola. Ola, founded by Bhavish Aggarwal and his former classmate Ankit Bhati saw a series of funding from multiple investors in the initial years with SoftBank being a major backer. Now the question arises why Aggarwal is potentially turning down a $1.1 Billion funding from the Japanese conglomerate!
Bhavish Aggarwal is apprehensive about losing control over his own company if SoftBank gets any more stakes in it. Aggarwal and Son did make a deal back in 2017 that included this $1.1 Billion over multiple installments. The initial funding was supposed to be $250 Million but when Aggarwal included the terms of his control and authority over the company, the deal slowly fell apart. One of the major reasons for Aggarwal getting anxious is that he got to know that SoftBank is also preparing to invest heavily in Uber, Ola’s direct rival in the Indian market. Rumors regarding Son attempting to merge the two ride-hailing companies were also doing the rounds and this came in as a huge blow for Aggarwal and his aspirations. If he had gone ahead with the deal, SoftBank would have acquired 40% of the company, which may have compromised Aggarwal’s position in his own company.
According to some sources, Bhavish Aggarwal discussed this issue with the founders of Snapdeal, as they too were facing a similar situation when SoftBank invested heavily in Snapdeal and later asked them to join hands with Flipkart, their direct competitors. Snapdeal stopped the deal and SoftBank ended up investing $2.5 Billion in Flipkart. We all know the current state of the founders of Flipkart with Walmart acquiring major stakes in the company and with SoftBank as the second biggest stakeholders. It is natural for Aggarwal to lose his calm and be worried about getting his position dissolved.
Bhavish Aggarwal has since then worked tirelessly, solely focusing on getting more funding, with Ola now about to march towards a Series J funding, an insanely unusual thing for such a huge company. By this time, such big companies would have gone public and here are the founders of Ola, still looking for funding to keep the reigns with themselves. Aggarwal has managed to come up with some good deals recently, like a $300 Million investment from South Korean automotive manufacturers Hyundai Motor Co. and a $90 Million investment from the co-founder of Flipkart, Sachin Bansal.
Aggarwal has further cut down on expenses by stopping the incentives program for the drivers, trimming down subsidies and by getting into the food delivery business as well. With a lot at stake, Aggarwal is going with all guns out to save his position on the board and keep his company with himself.
However, when contacted, spokespersons of both SoftBank and Ola have denied any rifts between the two and said that they are happy with the association they have. It would be interesting to see how Ola maintains it’s market share with Uber ready for a public offering at evaluation as high as $120 Billion!