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India’s locally grown ride-hailing service Ola Cabs is turning to some deep-pocketed investors to take on its biggest challenger in the market—Uber.
Several media outlets reported this week that a group of investors, including WeChat parent Tencent and Japanese conglomerate SoftBank, have invested about $2 billion in Ola. The new funding would give Ola a post-money valuation of about $3.8 billion, according to India-based newspaper The Economic Times.
Ride-hailing services like Ola have provided a new transportation option in a country with a relatively low car ownership rate. Ola was founded in 2010, giving it a first-mover advantage against Uber, which entered India in 2013. But Uber has made steady inroads against Ola in the market since then.
According to data from Cheetah Lab, Ola is the top mobile ride-hailing app in India as ranked by reach among Android users in late July, outdoing Uber by only a slight margin.
The Economic Times reported that Ola completes about 1.5 million rides per day in India—again, just slightly outpacing the 1.3 million rides per day completed by Uber as of August.
The mobile-first nature of the Indian market has not been lost on Ola and Uber, both of which have targeted smartphone users with their native apps. Research from comScore MMX Multi-Platform revealed that nearly all of the traffic to the two services came solely via mobile devices in July.
eMarketer estimates that India will be home to 267.1 million smartphone users this year, with their numbers growing to 409.8 million by 2021.
So far Uber and Ola have been warring with each other by cutting consumer prices while also investing in driver incentives. But as in the US, many drivers often work for both Uber and Ola, switching between the two depending on which is providing the better payday at any given moment.
The new funds are likely to be used by Ola to expand its geographic footprint in India’s smaller cities, as well as to recruit new drivers and vehicles to its service. It’s also expected that Ola will invest in its technology with the new cash infusion.
The new investment comes after SoftBank and Tencent partnered on investments totaling $4 billion this year to date in India’s homegrown ecommerce platform Flipkart, which is already entrenched in a battle with Amazon.
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