Oyo, the Indian budget hotel chain startup, is wrapping up a fresh round of about $100 million to $125 million that brings its valuation down to $2.5 billion, two people familiar with the matter told TechCrunch.
This is a steep drop in the value of the Gurgaon-based startup, which was valued at $10 billion in 2019. The startup, which has been struggling to raise revenue from institutional investors, has aggressively pitched for high-net-worth individuals in recent months.
“We really think that advantage makes a lot of sense today. It is profitable and @70% discount on previous valuation. The listing is expected in 18-24 months,” a representative of InCred, a financial firm partnering with Oyo, sent in a message (seen by TechCrunch) to a startup founder.
TechCrunch reported early last month that Oyo was looking to raise capital at a valuation of $3 billion or lower. At the time, Oyo categorically denied the “rumours, including this valuation”. The new round is likely to be larger in size, said the sources cited above, who spoke on condition of anonymity because the matter is not public.
The new funding follows Oyo abandoning its IPO plan last month. The startup — which includes SoftBank, Peak XV Ventures, Lightspeed, Airbnb and Microsoft among its backers — has had its IPO application withdrawn by India’s markets regulator, the Securities and Exchange Board of India, twice in the past four years.
Oyo had originally filed papers with SEBI in 2021 for a public listing, but withdrew it and re-filed in 2023. The company, which has raised over $3 billion to date, sought to raise $1.2 billion in $12 billion valuation in 2021 IPO.
Once one of India’s hottest startups, Oyo runs an operating system of sorts to help hoteliers accept digital bookings and payments. The startup once operated in dozens of markets, including the US and Europe, but has since scaled back its international play.
Noticed net profit of $12 million in the fiscal year ended March, according to founder and CEO Ritesh Agarwal.
Agarwal in 2019 took on $2 billion in debt to increase his stake in Oyo, which was valued at $10 billion at the time. It invested $700 million as seed capital in Oyo and spent $1.3 billion in a secondary market of Oyo shares. Since then, the startup has not commented on the status of that debt.
Indian newspaper Economic Times was also mentioned about the new funding on Monday, adding that the startup will seek approval from existing shareholders for the funding this week.
