Sachin Bansal is back in the game. Just weeks after getting $1 billion from the sale of his 5.5% stake he held in Flipkart to Walmart, he’s quickly started to put that money to work.

What's The News

Bansal is finalising an investment of up to $100 million in Ola, as we reported earlier today. This is, arguably, the biggest personal investment in the Indian internet space.

While Infosys cofounder, Nandan Nilekani and Sunil Munjal of Hero Enterprise have invested up to $10 million each in startups like ShopX and Oyo, respectively, Bansal’s $100 million cheque is in a different league.

Why It Matters

India's biggest internet companies have been and still are dependent on strategic investors like China's Alibaba and Tencent besides Japan's Softbank, US-based Tiger Global Management or Singapore's Temasek for funding of over $50-100 million. Bansal himself has talked about lack of Rupee capital for startups in India, with local investors missing out on wealth creation opportunities.

If Bansal's investment in Ola goes through, it will mark a significant milestone for domestic capital backing India's largest internet companies. While a lot of local money comes in at the angel and seed-stage stages, the investment market starts to skew towards funds like Sequoia and Accel which raise capital from overseas investors.

There is a significant gap in the mid-stages, too, with hardly any domestic capital coming in the $10-50 million range. Nandan Nilekani, who set up venture firm Fundamentum Advisors last year with mostly personal capital, is also focusing on this segment. Some VC firms like Chiratae Ventures (till recently IDG Ventures India) have also raised significant domestic capital.

More importantly, Bansal will bring in relevant startup building experience to these companies. The Indian startup ecosystem still does not have a lot of top entrepreneurs who have turned full-time investors.

How Will It Help Ola?

The entry of Bansal as a small but significant shareholder in Ola presents another ally to Bhavish Aggarwal, who has been locked in a battle for control against the largest shareholder in the company, Japan’s SoftBank.

More importantly, Bansal's experience of the complex negotiations for Walmart's acquisition of 77% stake in Flipkart for $16 billion may prove invaluable. Bansal had tried to gain stronger operational control with Walmart's entry, but had a fallout with Flipkart’s board as he did not manage the rights and the role he wanted.

While talks of a potential Uber and Ola merger have died down, it has not been ruled out. Uber in the past has said that it will not exit any country for a minority stake in a rival company, indicating it wants a majority stake in Ola. This is where Bansal’s expertise may come in handy for Aggarwal as both companies also share Tiger Global Management and Softbank as major shareholders.

(Featured image credit: Thinkstock)