Uber rival Ola’s boost from Tencent
Ola, Uber’s biggest rival in India (EPI), just closed a $1.1 billion round of financing led by Chinese Internet giant Tencent Holdings (TCEHY). This means that Ola now has a valuation of $4 billion. The funding will give Ola some stability as the parent company, though Ani Technologies is still a loss-making company, despite its robust revenue growth.
Tencent, which has a market cap of over $300 billion, has been pouring lots of money into Indian start-ups. Earlier this year, it backed Indian e-commerce company Flipkart, which is Amazon.com’s (AMZN) biggest rival in India. Tencent’s other notable investments in Indian companies include WhatsApp’s rival Hike Messenger and healthcare app Practo.
Uber’s new struggle in Asia
Uber has already faced several setbacks in Asian economies. Last year, Uber lost out to Didi Chuxing in China (FXI), while earlier this year, it ceded control to Yandex (YNDX) in Russia. Meanwhile, Southeast Asian ride-hailing company Grab has been trying to drive Uber out of that region and recently received $2 billion in funding.
With its current fundin—and likely more on the way—Ola could be in a position to do more than just compete with Uber in India. The Indian ride-hailing company has spread its wings in over 100 Indian cities, compared with two dozen or so cities where Uber operates.
At the same time, Uber invests a lot on driver bonuses and discounts for customers to remain competitive. But as its Asian rivals are being backed by solid investments, Uber may struggle to remain in Asia—unless it gets a backing of its own.