Indian hotel start-up now worth $ 10 billion as OYO aims to expand globally

In just six years, OYO has become the second most valued startup in India after Paytm as it hit the $ 10 billion valuation mark thanks to a further injection of $ 1.5 billion from its investors.

SoftBank, Lightspeed Venture Partners and Sequoia Capital are participating in the funding round. Founder Ritesh Agarwal will also invest $ 700 million in his company and buy the shares of Sequoia and Lightspeed for a value of $ 1.3 billion, but the two investors will still be shareholders of OYO. Agarwal’s total stake is now 30%.

The Gurugram-based hotel chain operates a sort of aggregator business / franchise model in which it rethinks existing low budget hotels, rebrands them and operates them with hotel owners.

OYO’s business model is a huge success in India, and it has spread to several other countries as well. In 2018, it was reported that OYO managed 180,000 rooms in China alone, which is 30,000 more than Southeast Asia combined. It also expanded to Japan through SoftBank.

OYO is also entering the US market with capital of $ 300 million and currently operates properties in cities of Dallas, Houston, Atlanta and Miami.

“We truly believe that we will be able to create a truly global brand from India, while also ensuring that the business is run efficiently and with a clear path to profitability,” Agarwal said in a statement. .

The company has an ambitious goal of 1 million rooms under his leadership, and is on track with 850,000 rooms and 23,000 properties in June.

Indian unicorns
India is home to two dozen other startups with a valuation of at least $ 1 billion. Some of these companies include Ola Cabs, Byju’s, Swiggy, Zomato, Babytree, and others. But only two companies have achieved decacorne status so far.

Cheating accusations
However, success is not the only story for OYO. Last month, a complaint was filed against Agarwal and two of his representatives. The complaint stated that Agarwal had deceived the complainant, Natarajan VRS, by at least $ 140,000. The agreement of an 80/20 profit share (20 in OYO and 80 in Natarajan) was reneged on by Agarwal and his representatives – Natarajan only received a 20 profit share.

OYO denied the charges.

This photo taken on November 20, 2018 shows Indian entrepreneur and founder of Oyo Rooms Ritesh Agarwal working on a computer in New Delhi. Photo: CHANDAN KHANNA / AFP / Getty Images

Christina A. Kroll