India: "the last billion person market left."
As reported in the Financial Times, Uber announced last Thursday that it will spend $1 billion over the next 9 months to aggressively expand its operations in India. Uber currently operates in 18 cities in India; it launched operations in 7 of those cities just last month.
Uber faces stiff competition from the Bangalore-based car-hailing company Ola, which already operates in about 100 Indian cities and claims 500,000 daily rides. (Uber currently claims about 200,000 rides daily, but expects to push this number up to 1 million by next March.) Ola has a pool of 150,000 drivers to draw from across the country; it plans to increase that number to 1 million by 2017. By contrast, Uber now retains about 50,000 drivers.
Although Uber has successfully raised $10 billion in debt and equity markets since its founding in 2009, Ola is no pauper – the company is wrapping up a fundraising round expected to generate $500 million; its implied valuation exceeds more than $4 billion. Ola also has the financial backing of Russian billionaire Yuri Milner’s DST Global fund, and Japanese technology group Softbank.
Despite growing pains in India’s tax-app sector, analysts at Morgan Stanley predict that the market will be worth $5 billion by 2020. Early Ola investor and Mumbai-based entrepreneur Anupam Mittal concurs: “It’s a bit of a war out there, but it will be winner takes all, and India is the last billion person market left.”
Founded in 2009, Uber has operations in 58 countries and over 300 cities worldwide. It has made headlines around the world by disrupting local taxi and car service markets through its breakneck expansion. Its recent fundraising efforts placed the company’s value at approximately $51 billion. Seven months prior, the company was valued at $40 billion. As such, Uber is amongst the most highly-valued private companies in the world.