Ride-hailing company Ola, on Wednesday, said that it had raised $1.1 billion in a funding round led by Chinese Internet giant Tencent Holdings Limited.
Ola’s existing investor SoftBank and other new U.S.-based financial investors had also participated in this round, the firm said.
Ola said it was also in advanced talks with other investors to close an additional $1 billion as part of the current financing round, concluding a total investment of more than $2 billion.
The investment is expected to help Ola build its war chest in the battle against Uber, which is gaining share in the Indian market.
“We are thrilled to have Tencent Holdings join us as new partners in our mission to build mobility for a billion Indians,” Bhavish Aggarwal, co-founder and CEO of Ola, said in a statement.
With its latest round of funding, Ola said it would be making strategic investments in supply, technology and cutting-edge innovations to build for the country’s unique transportation needs. The company said it would make significant technology investments into artificial intelligence and machine-learning capabilities to solve India’s unique mobility problems.
“We look forward to helping Ola further develop India’s transportation solutions,” Martin Lau, president of Tencent Holdings, said in a statement.
Deal activity in the ride-hailing space (excluding Uber) had fallen for four consecutive quarters prior to Q2 ’17, mirroring the cooling of investor interest in the broader on-demand space, according to New York-based CB Insights, a tech data analytics company. However, as Uber’s challenges mounted in Q2’17 and continued in Q3’17, players excluding Uber received over $10 billion in funding over the past two quarters, according to CB Insights.
“Of course, discussions for some of these deals would have begun well before Uber’s most recent developments, but there’s no doubt that the giant’s struggles have opened an opportunity for its smaller rivals and their investors,” said CB Insights.
It said the largest deal so far this year include Chinese ride-hailing company Didi Chuxing‘s mammoth $5.5 billion raise in May 2017. A host of others also saw over $100 million mega-rounds in Q2’17, such as Lyft, Go-Jek, Careem, Cabify, and 99 (formerly known as 99Taxis).
Founded in January 2011 by IIT Bombay alumni Bhavish Aggarwal and Ankit Bhati, Ola is present in 110 cities across India with over 14 unique categories to serve the various transportation use cases. These include India-centric categories such as auto-rickshaws and bikes.
Meru’s legal challenge
Separately, Reuters reported citing Meru Cabs’ CEO Nilesh Sangoi that the firm had filed four new complaints with the Competition Commission of India, claiming that Uber and Ola were abusing their dominance in four cities by burning vast sums of investor funds to distort the market. The planned investments in both the app-based cab aggregators by SoftBank underscored its view.