Oyo’s Valuation Slashed in New Funding Round of 2024

OYO CEO Ritesh Agarwal
Preeti Bali / 6:52 am / June 17, 2024

Indian budget-hotel chain startup Oyo is reportedly finalizing a new funding round of $100 million to $125 million, marking a significant decrease in its valuation to $2.5 billion. This represents a steep decline from the company’s $10 billion valuation in 2019.

Struggle for Funding and Shift in Strategy

The Gurgaon-based startup, facing challenges in raising capital from institutional investors, has turned to high-net-worth individuals for investment. In recent months, Oyo has been actively pitching to these individuals, emphasizing the company’s profitability and discounted valuation.

Previous Reports and Denials

Earlier reports of Oyo seeking funding at a reduced valuation were vehemently denied by the company. However, sources suggest the new round could potentially exceed the initial estimates.

IPO Plans Shelved and Valuation Drop

This funding follows Oyo’s decision to postpone its IPO plans last month. The startup has withdrawn its IPO application from the Indian markets regulator twice in recent years. The company’s valuation has plummeted from $12 billion in its 2021 IPO attempt to the current $2.5 billion.

Oyo’s Business Model and International Presence

Oyo, backed by prominent investors like SoftBank, Peak XV Ventures, Lightspeed, Airbnb, and Microsoft, operates a platform that enables hoteliers to manage digital bookings and payments. Although once active in numerous international markets, the company has scaled back its global operations.

Profitability and Founder’s Investment

According to founder and CEO Ritesh Agarwal, Oyo achieved a net profit of $12 million in the financial year ending March. In 2019, Agarwal took on a $2 billion debt to increase his stake in Oyo, which was valued at $10 billion at the time.

Seeking Shareholder Approval and Media Reports

The Economic Times has also reported on the new funding, indicating that Oyo will seek approval from its existing shareholders this week. This development comes amid a challenging funding environment for startups and reflects a significant shift in Oyo’s valuation and fundraising strategy.

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