Indian hospitality start-up Oyo now valued at $10 billion

by | 26 Oct 2019 | News

Oyo’s 25-year-old founder Ritesh Agarwal.

Oyo raises another $1.5 billion to further fund ambitious expansion plans around the world.

India’s largest hospitality start-up Oyo Hotels and Homes recently revealed that it is raising $1.5 billion from investors and its founder Ritesh Agarwal himself.

Funding Oyo’s ongoing global expansion

To further spur the growth of India’s hospitality unicorn in Europe and North America, Oyo is raising $1.5 billion, with $700 million coming from Agarwal and the remaining $800 million coming from investors such as Japan’s SoftBank.

In a bid to triple his ownership stake in the company he founded in 2013, Agarwal will spend another $1.3 billion to buy back shares from initial investors such as Lightspeed Venture Partners and Sequoia Capital.

This step is being bankrolled by the Japanese banks Mizuho Financial Group Inc. and Nomura Holdings Inc., according to insiders familiar with the deal.

The latest round of funding makes Oyo India’s second-most valuable start-up, with an estimated worth of $10 billion. Today it is second only to the digital payments company Paytm, which is also supported by SoftBank and is valued at $15 billion.

“Oyo’s valuation signals its scale and growth,” said Ujjwal Chaudhry, the Bangalore-based director at RedSeer Consulting. “The quality of the experience is not top-notch but it’s improving.”

Oyo’s spectacular growth journey

After being founded only 6 years ago, the Oyo brand spread like wildfire. Today, Oyo operates over 1.2 million rooms in more than 80 countries. With 590,000 rooms in China, it is the largest foreign hospitality brand in the country. After entering the US market earlier this year, Oyo already manages 7,500 rooms in 60 cities there.

Its concept of offering hotel owners a makeover of their property as well as easy-to-implement standards and staff training keep attracting new partners willing to work with the young company. In exchange for Oyo’s operations and marketing support, hotel owners pay the brand around 25% of every booking.

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

At a time where top-valued start-ups such as WeWork have disappointed markets with slow IPOs, Agarwal is doubling down on his own company to keep the ball rolling and discount any questions about the company’s integrity and ability to pay their partners and debtors.

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