India’s startup poster child Ola is facing turbulent times as the ride-hailing firm’s valuation plunged below $2 billion, revealed regulatory filings by global investment giant Vanguard. This marks the third consecutive markdown by Vanguard and lays bare the growing crisis engulfing major startups in India.
Ola’s parent ANI Technologies saw its valuation slashed to $1.8 billion as per Vanguard’s November 2023 regulatory filings. The markdown comes close on the heels of Paytm and Zomato which have seen their market capitalizations erode by over 60% amid a funding winter.
Vanguard holds a minor stake in Ola but the persistent markdowns indicate wider market sentiment turning bearish on the once high-flying startup’s prospects. Ola’s valuation stood at $3.5 billion in 2023 before investor sentiment soured in the face of elusive profits, cutthroat competition and a shaky macroeconomic environment.
Ola appointed former Pepsico veteran Hemant Bakshi as CEO in an attempt to revive its fortunes through a reorganization of business units. Founder Bhavish Aggarwal moved to the Executive Chairman role focusing on product and technology.
The mobility business was split into standalone verticals for financial services, quick commerce and logistics. The company claims operational profitability at the EBITDA level for its mobility vertical in FY23. However, slow consumer demand continues to pinch revenue growth.
Ola reported standalone revenues of ₹1,987 crore in FY23 but losses stood at ₹1,182 crore indicating the bumpy road ahead.
The startup funding euphoria which catapulted firms like Ola, Paytm and Zomato to unicorn status in record time has evaporated. As funding dried up, cracks in their business model are now apparent.
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Ola’s rapid fall in valuations mirrors the turbulence faced by India’s startup sector as investors demand devious routes to profitability.
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The much promised public listing gains have failed to materialize and established behemoths like Reliance and Tata now pose an existential threat.
With the startup world confronting its first major downturn, the true grit of technology disruptors like Ola will be severely tested in the coming months.